“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
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.
