INFLATION: CAUSE AND EFFECT

 “There is no subtler, no surer means of overturning the existing basis of society than to debauch the currency.  The process engages all the hidden forces of economic law on the side of destruction, and does it in a manner which not one man in a million is able to diagnose.” John Maynard Keynes

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In economic terms, ‘inflation is the persistent substantial rise in prices related to an increasing volume of money.’ Put in simple terms, things cost more because money is worth less. How does this happen? Well, printed money backed by nothing has no value. It’s like putting Monopoly money into circulation and calling it real. Say you have $100 and add $100 of Monopoly money. Now you have $200, but half of it is fake. Sellers know this, so they double their prices. The increase cost of goods is directly proportional to the amount of fake money added to the money supply. This is inflation. This is what happens when the Fed ‘makes’ money.

            Since the creation of the Fed in 1913, the value of the dollar has been reduced by 95%. Today, what you buy for $1.00 you used to be able to get for a nickel. If you have $30,000 in your bank account today, with inflation at 3.5 %, in ten years you would have $20,550. With inflation at 5.5%, in ten years your $30,000 would be worth $16,500. Inflation decreases your buying power. Even if you don’t spend your money, you become poorer over time.

            Inflation is an invisible tax. The Fed prints money for the government, diluting its value for everyone. If the government gave this money to everyone, doling it out equally, then everyone would suffer the same from the reduced value of the dollar. But that’s not what happens. The government spends the printed money on ‘special projects’. It gives away money to ‘special friends.’ A few benefit from the printed (free) money, while the rest of the population gets nothing but a dollar that is worth less. Forget about taxes, this is the way wealth is really redistributed.