Prevent the European Central Bank from gaining control over you

Inflation, currently at a staggering 7.9%, is causing significant concern for individuals in Germany as it erodes the purchasing power of their savings. With the German public having amassed a total of 2.23 trillion Euros in savings accounts, the annual loss of purchasing power due to inflation poses a significant challenge.

The European Central Bank (ECB), traditionally tasked with ensuring the stability of the Euro's value, is facing a test in maintaining this goal amidst the current high inflation rate. The ECB's actual goal is to limit annual inflation to a more moderate 2%.

The ECB's approach to currency stability may be shifting, with current head Christine Lagarde taking a more ambitious approach than her predecessor, Mario Draghi. While Draghi's tenure saw the goal of currency stability questioned, Lagarde is now pursuing more ambitious climate goals in addition to currency stability.

Disrupted supply chains and rising commodity prices are external factors affecting the situation. Economists at the Bundesbank expect double-digit inflation rates for the winter months, with an annual inflation rate of approximately 2.4% for the winter months of the fiscal year 2025.

The time of negative interest rates is practically over, as most banks have abolished custody fees. However, money in savings accounts still loses value, even with scarce interest rates. For instance, with an assumed interest rate of 0.5%, someone with 100,000 Euros in their account would still lose 7.4% of their wealth annually. If inflation remains this high, the purchasing power of 100,000 Euros would decrease to 71,800 Euros in five years.

The loss for the German saver due to inflation is immense, as the purchasing power of their savings can significantly decrease over time. This erosion of private wealth is a significant concern for the German public, and the loss of purchasing power is a pressing issue that needs to be addressed.