Money that Used To Be Yours

In theory there is only one rational meaning for Inflation: an increase in the quantity of money, without a corresponding increase in the need for money, so that a fall in the objective exchange-value of money must occur. In other words, inflation of the money supply causes rising prices because more dollars equals a lower value of those extra dollars.

Inflation is the debasement, the devaluation, of money. Consider it this way: if our coins were made of gold, or our paper money could be redeemed for gold coins, the amount of money would be limited entirely by the amount of gold in reserve or circulation in the nation. If our nation then decided to make its coins out of 50% gold and base metal combined, every coin and every dollar would suddenly be worth half, and there would be twice as many coin equivalents available. (True story, incidentally.)

When this inflation of currency happens, the government demands an exchange without an exchange-value. You are required by law to turn in your gold coins for the shiny new ½ gold coins. If you had $100, you suddenly have $50 in purchasing power. That’s inflation. What happens? Prices go up, only because the exchange-value went down. Guess what happens when the Fed says, “Just start the presses and print all you can?

The rising prices are what we normally see. That’s a shame, because we want to blame the business cycle, or greed. It is greed, but greed at the government and bank level.

Printing money is a tax, and a very dangerous, greedy tax.

Milton Friedman called inflation, “taxation without legislation.”  He knew it was a scam.  Keynes knew this. “By a continuing process of inflation,” he said, “government can confiscate, secretly and unobserved, an important part of the wealth of their citizens.”

As you can see in the real hockey stick chart above, inflation is a significant part of the Obama legacy.  Obama was a Keynesian. Bush helped with the first two trillion, but the rest belongs to Obama.  Reality?  In seven years of the Obama administration, we were bilked for seventy-five cents of every dollar we had.  And we get taxed for all of it.

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