Do you need a private bank?
What can a private bank offer you that you can't get from the high street? Liana Cafolla finds out
American economist Milton Friedman famously said in 1976: "Only government can take perfectly good paper, cover it with perfectly good ink and make the combination worthless." Friedman's musings on the dangers of a debased currency are ringing true again. Nearly six years after the financial crisis, central banks around the world are turning to the printing presses in ever-greater vigour.
Recently, news of the Bank of Japan's commitment to radically expand the nation's monetary base, in what some economist detractors have labelled a dangerous experiment, underscore the new era of policymaking.
Whether global policymakers can pull off what amounts to a high-wire act remains to be seen, but the risks that something could go badly wrong are rising as the stakes grow higher.
In a nod that pays homage to Friedman's words 37 years ago, the importance of protecting one's assets from the dangers of monetary debasement have never been more important, wealth managers say. Data released in June by Swiss bank Julius Baer shows that a broad measure of the real cost of living for wealthy individuals is on track for an 8 per cent rise in 2013, outpacing the standard measure of inflation by a wide margin.
In Shanghai, costs are heating up at an even faster rate, as luxury lifestyle inflation jumped 10 per cent from a year earlier, or 11 per cent when based in US dollars, according to figures from the bank. The rate marks a moderation from a year earlier thanks to cooling in luxury property prices, but is still outpacing China's official consumer price index of 2.1 per cent in May on year. Still, the Julius Baer report spotlights other areas of spiralling price inflation, including university education costs, which are up 30 per cent from a year earlier, while high-end wine prices leapt 16 per cent, and room tariffs for a hotel suite have risen 15.7 per cent.
"The spectre of inflation remains very real," Julius Baer chief executive Boris Collardi writes in the wealth report, in reference to the individual constituents of the luxury lifestyle index.