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Inflation 101

Are you murky on the whole reason that inflation is effectively theft or a hidden tax? If so, you may want to check out this reasonably-short piece: Inflation 101. Excerpt:

For the sake of simplicity, let us assume that America’s money-supply is US$100 and this is the amount available to buy the five oranges its economy produces. Common-sense dictates that under this situation, each orange will cost US$20. Now, let us introduce a banking-cartel called the Federal Reserve, which is able to extend credit (via its debt-based fractional reserve banking system); thereby inflating the supply of money within America to US$1,000. Under this scenario, with a 10-fold increase in money available to purchase the same amount of produce, each of the five oranges will now cost a whopping US$200! An orange is still an orange; it does not change. What changes is the purchasing power of the paper money that is used to buy that orange.

The government and its favored cronies, though, get that extra $900 first, before prices rise, so they get the full benefit, just like counterfeiters get the benefit of printing fake $100 bills.

This government dodge, by the way, has been going on for thousands of years. In the old days, the king had to recall the coins and shave metal off ’em. The whole process took a long time, made the citizens mad (they could see the debased currency), and generally sucked. Now, the government, by borrowing from the Federal Reserve that can create digitally, does it in moments.