The tendency of human beings to want to obtain things easily is the ultimate cause of inflation. The actual mechanisms resulting in the general rise in prices of goods and services simply stems from this tendency. Governments, and government agencies, remove restrictions on money creation so it is effortlessly created and subsequently injected into the economy. Inflation or the loss of a currency’s purchasing power has always occurred, not every year or decade, but it eventually does.

Real estate is limited, therefore increases in price as more currency units are created. Real estate, as an investment, provides cash flow from collecting rents that can be increased every lease contract renewal. As inflation rises higher than the normal 2% target rate, rents rise with it. Furthermore, the depreciation aspect of real estate reduces the amount of taxes paid by property owners. Finally, real estate properties normally are purchased using a long-term fixed-rate loan which usually covers up to 80% of the property’s value. Thus, wealth is transferred from the money lender to the money borrower over time. This is because the mortgage payment stays the same while the income from the property increases every year.