Published by The Prehn Institute, Book 1
The Inflation Tax
How Governments Erode Debt and Savings
Kindle ISBN 979-8-9984091-0-3. Paperback ISBN 979-8-9984091-1-0. Hardcover ISBN 979-8-9984091-2-7.
A short, sourced account of the three times since 1945 that American inflation shrank the real value of government debt, and of what happened to cash, bonds, stocks, houses and gold while it did.
What the book covers
The United States has let inflation erode what it owes three times since 1945. From 1946 to 1951, prices rose 44 per cent and gross federal debt fell from 119 per cent of GDP to 74 per cent, while cash lost 31 per cent of its purchasing power in six years. From 1966 to 1982, cumulative inflation reached 206 per cent and cash lost 67 per cent. From 2020 to 2025, prices rose 26 per cent, and debt stood at 123 per cent of GDP in 2026 against 105 per cent in 2019.
The book sets six stores of value side by side, year by year, for each episode: cash, Treasury bills, ten-year bonds, the S&P 500 with dividends, house prices and gold. A dollar of 1971, the year the United States left the gold standard, buys about 12 cents of goods today. In the 2020 episode, M2 rose 40 per cent in two years, CPI peaked at 9.1 per cent in June 2022, and real returns on ten-year bonds ran minus 4.4 per cent a year through 2025.
A separate chapter looks at gold, whose real price is now 1.16 times its January 1980 peak, and the companies whose pricing power let revenues keep pace with rising costs. A further chapter asks who pays.
Chapters
- Chapter 1. The trap, stated plainly
- Chapter 2. 1946 to 1951: the war debt and the pegged rate
- Chapter 3. 1965 to 1982: the Great Inflation
- Chapter 4. 2020 onward: the same trap, new tools
- Chapter 5. A dollar of cash across eighty years
- Chapter 6. What has protected purchasing power, by episode
- Chapter 7. Moats and metals: why pricing power and scarce things hold up
- Chapter 8. Who pays: the distributional side
- Chapter 9. Living inside the trap: what the record supports
- Afterword: about the research
Sources
Every figure comes from the Federal Reserve, the Bureau of Labor Statistics, the Treasury or a named academic data set, and each is cited in the notes so that a reader can follow it back to the original table.
Editions
| Edition | ISBN | Details | Where |
|---|---|---|---|
| Kindle | 979-8-9984091-0-3 | The Prehn Institute, 2026 | Amazon |
| Paperback | 979-8-9984091-1-0 | The Prehn Institute, 2026, 84 pages | Amazon, Lulu |
| Hardcover | 979-8-9984091-2-7 | The Prehn Institute, 2026, 84 pages | Amazon, Lulu |
Also by Felix Nikolas Prehn
About the author
Felix Nikolas Prehn is an economist and former investment banker. He co-founded TradeVision.io and founded Winston Daily and The Prehn Institute. Winston is his adopted golden retriever. Felix is a vocal advocate for animal rescue.