This page has been archived and commenting is disabled.
How Inflation Helps Keep The Rich Up And The Poor Down
Submitted by Jorg Guido Hulsmann via the Ludwig von Mises Institute,
The production of money in a free society is a matter of free association. Everybody from the miners to the owners of the mines, to the minters, and up to the customers who buy the minted coins — all benefit from the production of money. None of them violates the property rights of anybody else, because everybody is free to enter the mining and minting business, and nobody is obliged to buy the product.
Things are completely different once we turn to money production in interventionist regimes, which have prevailed in the West for the better part of the past 150 years. Here we need to mention in particular two institutional forms of monetary interventionism: (fraudulent) fractional reserve banking and fiat money. The common characteristic of both these institutions is that they violate the principle of free association. They enable the producers of paper money and of money titles to expand their production through the violation of other people’s property rights.
Banking is fraudulent whenever bankers sell uncovered or only partially covered money substitutes that they present as fully covered titles for money. These bankers sell more money substitutes than they could have sold if they had taken care to keep a 100-percent reserve for each substitute they issued.
The producer of fiat money (in our days, typically, paper money) sells a product that cannot withstand the competition of free-market moneys such as gold and silver coins, and which the market participants only use because the use of all other moneys is severely restricted or even outlawed. The most eloquent illustration of this fact is that paper money in all countries has been protected through legal-tender laws. Paper money is inherently fiat money; it cannot thrive but when it is imposed by the state.
In both cases, the production of money is excessive because it is no longer constrained by the informed and voluntary association of the buying public. In a free market, paper money could not sustain the competition of the far superior metal moneys. The production of any quantity of paper money is therefore excessive by the standards of a free society. Similarly, fractional reserve banking produces excessive quantities of money substitutes, at any rate in those cases in which the customers are not informed that they are offered fractional-reserve bank deposits, rather than genuine money titles.
This excessive production of money and money titles is inflation by the Rothbardian definition, which we have adapted in the present study to the case of paper money. Inflation is an unjustifiable redistribution of income in favor of those who receive the new money and money titles first, and to the detriment of those who receive them last. In practice the redistribution always works out in favor of the fiat-money producers themselves (whom we misleadingly call central banks) and of their partners in the banking sector and at the stock exchange. And of course inflation works out to the advantage of governments and their closest allies in the business world. Inflation is the vehicle through which these individuals and groups enrich themselves, unjustifiably, at the expense of the citizenry at large. If there is any truth to the socialist caricature of capitalism — an economic system that exploits the poor to the benefit of the rich — then this caricature holds true for a capitalist system strangulated by inflation. The relentless influx of paper money makes the wealthy and powerful richer and more powerful than they would be if they depended exclusively on the voluntary support of their fellow citizens. And because it shields the political and economic establishment of the country from the competition emanating from the rest of society, inflation puts a brake on social mobility. The rich stay rich (longer) and the poor stay poor (longer) than they would in a free society.
The famous economist Josef Schumpeter once presented inflation as the harbinger of innovation. As he saw it, inflationary issues of banknotes would serve to finance upstart entrepreneurs who had great ideas but lacked capital. Now, even if we abstract from the questionable ethical character of this proposal, which boils down to subsidizing any self-appointed innovator at the involuntary expense of all other members of society, we must say that, in light of practical experience, Schumpeter’s scheme is wishful thinking. Credit expansion financed through printing money is in practice the very opposite of a way to combat the economic establishment. It is the preferred means of survival for an establishment that cannot, or can no longer, sustain the competition of its competitors.
It would not be uncharitable to characterize inflation as a large-scale rip-off, in favor of the politically well-connected few, and to the detriment of the politically destitute masses. It always goes in hand with the concentration of political power in the hands of those who are privileged to own a banking license and of those who control the production of the monopoly paper money. It promotes endless debts, puts society at the mercy of monetary authorities such as central banks, and to that extent entails moral corruption of society.
- 18008 reads
- Printer-friendly version
- Send to friend
- advertisements -


The Silver Bears have been awfully quiet....
Someone donated a bunch of honey to their youtube channel. And they were monumentally wrong about short-term price action, too.
What a fucked up society the banker scum have created. Families destroyed, children without fathers, police state, bullshit wars that are fought to create debt, millions dead, just so these sick sociopaths can fuck the best goyim whores and show their ass and wealth to the peasants. All bought with counterfeited money, these asshole are too lazy to work for a living.
When the Jerry Springer crowd is starving send in the bankers to (be) feed (to) them. Hang the motherfuckers high.
Bunch of sociopathic murdering scum. They will be chased from one end of the earth to the other end for the next 100 years and killed.
So, a good time to turn my IRA into a metals account and take delivery?
So what he means to say in the article is that if I print the money I can spend it and get real assets with it like stocks in companies, physical goods like cars and land and houses, just for hitting the print key with my thumb while the rest of the time it sits up my ass doing nothing. While the working stiff who cant print his money has to work 7 days a week to be able to buy anything decent. Yeah I would say its a set up.
So the Fed gives the money basically for free to the banks (even if they charge a nominal rate the bank charges me a heck of a lot more) who then pass it on to their connected buddies that want to do some mergers and acquisitions on Wall Street (eliminating competition and raising prices), or who want to speculate with it and drive up the prices of commodities.
Yep its a shitty world, and when the stuff gets unbearable its called a revolution and people lose their heads, unfortunately in this day of private jets and homes around the world, their heads are safe, and joe schmo ends up dying in the mayhem.
This is why the vile scum with no morals will always be involved with the fed, the banks, and they financial markets. They are closest to the tap.
'They are closest to the tap.'
And they have sacked the filterers because they believe they are an unnecessary expense whilst not understanding that the added security that they pay for that gives them that warm feeling at night is just a private prison for rich people provided by Group4
Once the middle classes have been sucked dry then the parasitic class (nurtured by the upper class) will turn their proboscicies towards their hosts
It's the economy stupid. (are you getting it now?)
Yeah....and we're quietly....STACKIN!
so fuckin KEEP IT QUIET......DAMMIT!
I wonder when investors are going to stop suing their (LLC & LLP) partners in private deals because interest rates are so low. It's getting disadventageous for settlement payouts over the "long term"? </sarc>
Notice how many small banks were liquidated since 09, the monopoly on military scale force has now been expanded to banking. Most of those small town banks given access to unlimited zero Iinterest money like Bacteria Of amerika and Jame P DimonChase could have easily survived.
Bbbbbbbut we were told in a definitive manner that the TBTF bankz were to be downsized!
Taleb was proposing the old banking model of low risk utility banks and "Investment" bankz as two distinct classes.
He's been subdued of late (like several years) on this subject. Prob' figgered out he was pissing quite close to the third rail.
- Ned
Every bit of new monopoly money=some labor not paid for.
People use "monopoly money" because carrying gold nuggets is damned inconvenient.
The production of any quantity of paper money is therefore excessive by the standards of a free society.
Well, then, it's a good thing we don't live in a free society.
say, when push comes to shove, don't the rich have the army in their pocket?
Blackwater
I love these Mises people because they are such bungholes.
They don't understand the differences between money, currency and Legal Tender.
'Banking is fraudulent whenever bankers sell uncovered or only partially covered money substitutes that they present as fully covered titles for money'
A private business selling something, what's wrong with caveat emptor (I thought Mises loved private enterprise)
inflation works out to the advantage of governments and their closest allies in the business world.
In an ideal world, government is supposed to represent the whole of the people, businesses that align themselves with the goal of the betterment of the people would naturally be at an advantage over those businesses that only choose to exploit the people and reward the few.
Ergo, Mises people are anti-government except where they themselves are at an advantage.
Mises people are schizos at best.
Are you really that stupid or are you bull shitting us?
I'm going with 'that stupid'. Just a hunch.
calling you out. you have been a member for over 3 years, yet you only have 10 comments, starting like a month ago. fucking troll
The rich do better than the poor no matter what system exists...
The poor are always left with the shit end of the stick...
Recall that the Gilded Age was in the era of the Gold standard...
The post WWII US "Golden Age" was an aberation of the first order and ever increasing supplies of cheap energy are a large part of what happened...
Flak that was a good post! Simple & to the point. " With a twist of history..."
Back in the day the poor had a clue and insisted on hard money, gold.
Just where do you think the saying ' gold is the money of kings, silver is the money of gentlemen, barter the money of peasants and debt the money of slaves' came from?
Flak, you have to consider the rich that were fucked up by new tech or changes in business. Not all succeeded.
Flakmeister, read your first sentence again !
of course the rich will always be better off than the poor no matter how you measure it.
The question is the shittiness of the stick overall and the gradient between only a bit shitty and very shitty.
Post WWII productivity boomed but those producing only saw a small rewared
Post 72 the recipients of the majority of the post war productivity boom have re-enacted the enclosure movement.
Post 9/11 those beneficiaries have sought to use taxpayers money to shore up (and entrench) their position
The stick is getting very shitty at one end but it will inevitably be turned around
True words once again.
"You will always have the poor among you, but you will not always have me."
US Grant rode to his inauguration on a horse. The White House had chamber pots and was lit by candles and lamps buring whale oil. Agriculture and medicine hadn't really changed since Roman times.
28 years later McKinley rides in a car. The White House has electric lights, water, and sewage. There are motion pictures, people know what causes disease, and powered flight is a few years away. The standard of living of a common laborer has doubled in 30 years without his wages rising at all.
All done under the gold standard.
Yes, but they were still barbarians.
duo,
I appreciate it is against the rules (only two at a time) but in this case we can make an exemption.
'The standard of living of a common laborer has doubled in 30 years without his wages rising at all.'
And yet productivity rose threefold over the same period
Prices doubled over the same period
Did your common labourer feel the benefit of the modern society ?
The only reason that children were stopped from climbing chimmneys was they could be leveraged by education into being more productive whilst keeping the wages of your 'common labourer' down,
That 'Common Labourer' who could buy his own hose, shoe his own horses, grow his own food and raise a family of five on a single mans wage.
Where is that poor fucker now ?
Up to his eyeballs in mortgage debt, his 1.6 kids have $30,000 student debt
Fucking great this progress things isn't it.
What happened to the Great American Dream
(whay have you let it become a nightmare?)
Who made the capital investments in equipment that made that labor more productive? I went from 'just a hunch'' to 'damn sure he's that stupid'.
What $400 a year could buy you in 1900 was a lot more than the same amount in 1870.
Also, of a working schmo put 5% of his salary away for 20 years, he would have had a decent retirement.
He's right that Mises doesn't know what money is. Money is debt, not metal. Fungible IOUs.
Flackmeister,
The post WWII US "Golden Age" occurred because German, French, Iti;lian, much of English and certainly Japanise industry was bombed out. Anything that could be made could be sold. American cars were worth a small fortune in some parts of the world and US industry was intact at top speed. I have still got some silver dollars that i got for picking cotton @ $1 / hundred lbs. They are selling for $27 each now. Am I supposed to pay tax if i sell them?
Yes, the state of the rest of the words's manufacturing was definately part of it...
But it was all predicated with rising supplies of cheap oil...
This problem would cease to be if those who saved simply save in something other than the fiat currency they detest...but they don't. They complain endlessly that it is beyond their control yet continue to see paper as they only way to save.
Accept fiat as the handy form of short term wealth savings and for it's ease of transfer. Simply don't keep it long enough to go bad on you.
There are far better long term store of wealth assets. Gold is cheap and relatively stable now. Why not gold?....oh...you want to be a speculator and not a saver....I see...
In Turkey people save in bricks and steel and cements. when they have enough material they add a room to their existing house.
Yup! THe Turks should never be underrestimated.
Sunday nite JAZZ Let's enjoy the time we have left..
http://www.youtube.com/watch?v=7GSPQgKfwkg
Bernanke and Obama have impoverished millions.
Time to dethrone royalty......buy MOOOOAAAAARRRR bitcoin!
We're only poor when funding the EBT clan.
don't worry about eddie lampert or angelo mozilo, they got plenty. crime pays, insider trading pays. the funny part is all tangelo had to do is make one favorable mortgage loan to one loser senator and he was home free from felonies galore. cheap whores in gubbermint, emphasis cheap.
And whilst we're here Flak,
why not give us the benefit of your definitions of
Money
Currency
Legal Tender
in your own time...
Gold.
Fiat.
The guys with the guns tell the peasants what is legal tender.
Does that help.
economics9698
Legal Tender is the payment method that you must pay your taxes in.
It could be potatoes, it could be F16s
It is NOT money or currency (although it could be)
Where is the Flak when you need him ?
Ahhhh you may not know this but I have been teaching econ for 15 years Bob.
Ahhhh, econ, you may have been teaching it but do you understand it ? (given the BoE saying how money is really created rather than how econ has been teaching it ?)
Yess, I'm calling you out, It's not personal, it's economics
You and Flakmeister, 2 on 1, bring it on.
In other words I know the fucking definitions, are you dumb? A little slow?
Sorry Econ, I must be a little punch drunk, I accept You Know the definitions, how about you spill the definitions to us little people, are you afraid we might misunderstand them or are you perhaps afraid we understand them all too well ?
Perhaps Econ you have spent the last 15years (lucratively) peddaling myths that make you seem big and us seem small.
Get off your fucking high horse and define
Money
Currency
Legal Tender
How hard can this be for a letcherer
(think about it)
delete
The non solving of any problem banking related has to have evil consequences.
Also when do we start stringing up Accountanting Orgn?
Does the government come in and say to Engineering Orgn F=MA has been changed to F=1/2 M/A?
Economics has always been a snake oil factory, but Accounting used to be a revered profession. Now lower than Used Car sales
It's simple really.
The rich have access to unlimited credit, which is in a sense debt, they get to leverage that debt (which also happens to be new money in circulation) first before the inflation raises prices, this allows them to essentially print money, buy assets, utilize those assets to make more money, then they wait till the assets have their prices inflated so that they can dump the assets on someone else and pay off their debt (if they even need to pay off their debt, since most of these assholes control the books for the institutions doing the lending anyway!)
Rinse, Repeat.
A commoner does not have such easy access to vast amounts of new credit money, and even if they did, they would fail at leveraging it, and they don't have the bailout protection from the government mafia to back them up in-case they make a mistake.
So what are you supposed to do as a "normal" non elite?
You have two choices.
Roll over, Bend Over
or
Revolt
The solution isn't easy, but its simple.
The only "peaceful" way for the masses to escape the usury slave system, is for as many people as possible to simply "opt out" of the system.
Use Bitcoin, Use Gold, Use whatever, anything but the worthless fraudulent bank credit book money, that never existed, still doesn't exist, and will never exist.
If everyone rejected FIAT, the Elite Class would be selling their assets at fire-sale prices for whatever the new accepted currency is, because there is one thing Elitists will never do and will sell their soul to escape doing, and thats actually working and providing value to society, take away their printing press toy and they are completely fucked and worthless human beings.
Inflation is great when your first in line to get the new $$..
How about you designed a system whereby those furthest from the tap benefitted most, where money created has no value at inception but gains value as it passes through hands.
How about we take all the accountants out and hang them because they sure aren't helping.
"...Inflation is a 'persistent, substantial rise in the general level of prices [because of] an increase in the volume of [counterfeit] and resulting in the loss of value of currency [which was gained by the thief who introduced the counterfeit].'
...With the view toward learning what inflation is then we discover that the proper answer to the original question of 'what is inflation?' is to begin by asking, "Inflation of what?" For as has been demonstrated, there can be the inflation of money or there can be inflation of counterfeit where either of which will result in the opposite effect on the purchasing power of the currency. This then is the nature of "a persistent, substantial rise in the general level of prices" and the "loss of value of currency" or what modern economics beguilingly refers to as only "inflation." "Inflation" is the result of the increased volume of counterfeit, it is caused by thieves, and therefore it can never be good no matter to what degree. The tyranny of modern economics says that a little inflation running at a constant 2% rate is good. Good for whom? The victim or the thief? When is theft good or bad only as a matter of degree? Is it also said that if one endures a little theft, say a constant 2% is stolen from you, that this is good?"
- http://ocsure.blogspot.com/2014/05/inflation-or-deflation-of-currency.html#comment-form
There is only one definition of inflation. Inflation = an increase in the money supply. An increase in the money supply increases demand, which (all things being equal) makes prices go up.
The word inflation is often (like 100% of the time) incorrectly used to describe high interest rates and an increase in prices. Since high interest rates lead to a decrease in prices, how can an increase in interest rates AND an increase in prices BOTH be inflation? They can't, and they aren't.
The best thing would be for every writer, every reader, every politician, every media outlet, etc., to STOP using the word inflation, period. Say what you mean. If you mean price increase, say that. If you mean money supply increase, say that. If you mean interest rate increase, say that.
We cannot understand economics (much less make good decisions) if we can't even get the basic words right.
Serenity Now,
What about this?
Every exchange of product involves a participant on each side with a currency inbetween them to facilitate the exchange.
1) Each party does productive work thereby increasing products but not currency; therefore prices decrease.
2) Now assume one party does productive work and produces a product but the other party does not and instead impersonates that he did work by bringing new currency to the exchange instead of new product. This increases currency but not products and therefore prices increase.
Exchange 1 represents the inflation of productive work, or money.
Exchange 2 represents the inflation of theft, or counterfeit.
Naming inflation as only a "price increase" is not to identify if theft was involved that is the source of the increase and therefore gives thieves a free pass. The thieves know this and use it to their advantage to the tune of decimating the wealth of the middle classes.
If not, then when purchasing power is lost where did it go?
OC,
You worded this very differently than I ever would, so I will try to answer as best I can in the context of "inflation = increase in the money supply" definition.
(1) Yes. This is an increase in Supply. All things being equal (ie, Demand), Prices will decrease.
(2) Also yes. Let's say this "impersonation" is a credit card. This increases the Money Supply and all things being equal, it will increase Demand, which will increase Prices.
You say (1) represents the inflation (you mean increase) of productive work, or money.
It is really the increase in Supply, which I pointed out before. Productive work is the allocation of resources to turn inputs into outputs, or Supply. It is not money. Money is a medium of exchange for those outputs (Supply), so that we don't have to spend all day bartering.
Then you say (2) represents the inflation (again, you mean increase) of theft, or counterfiet.
Actually, (2) is the real definition of inflation. It is the increase in the Money Supply. In your example, someone showed up with new currency. In my example, it was a credit card. In the real world, it could be currency printing, a credit card, a mortgage, a student loan, food stamps, etc. If it SPENDS like money (a medium of exchange), then it IS money.
Is it theft, or counterfeit? If it is conjured out of thin air, then maybe so. I think that's a different question and debate.
It does not, however, change the definition of inflation.
Inflation = Increase in the Money Supply. When there is more money chasing the same amount of goods, then Demand overcomes Supply, and Prices go up. Like night follows day. That's where the purchasing power went. :)
Serenity Now,
"Is it theft, or counterfeit? If it is conjured out of thin air, then maybe so. I think that's a different question and debate." It is not a different question and debate. It is instead the entire purpose of this one. You are affirming all the facts that I've identified except the reason why the discussion begins in the first place: Who is doing productive work and who is stealing it? The answer to that question is ascertained by affirming or denying what is the nature of the origination of the currency. Is it money or is it counterfeit? And as we both agree per Exchange example number 2, the prices go up because the new currency, which represents the counterfeit, has been introduced. Prices go up because the purchasing power has gone down by a result of the counterfeit. The depreciation of the value in currency is in direct proportion to the thieves' gain. I have yet to find the facts which I am identifying refuted. They remain uncontested and can be found here: http://ocsure.blogspot.com/ The purpose of creating this blog is to not have to keep typing the facts over and over in onlne posts. See for yourself. I use common sense examples to verify what I am identifying."An increase in the money supply increases demand, which (all things being equal) makes prices go up. "
Except, the money supply has increased drammatically and prices have not. Your definition is not consistent with reality.
Can you back that up with any examples?
Because the reality is:
M has gone up via mortgages, D goes up, P goes up (home prices);
M has gone up via student loans, D goes up, P goes up (college tuition);
M has gone up via food stamps, D goes up, P goes up (food prices);
The overall money supply has consistently gone up, driving up demand, and driving up prices for the past 40 years. That doesn't necessarily apply to all sectors, but it's an overall truism.
Greenskeeper_Carl
Fair call, try googling me. I'm legit. Flakmeister is too, econ probabably is but is only 19, who the fuck are you?
If I'm A troll, why am I trying to provoke questions relevent to the post.?
Why am I not swayed by irrelevent comments designrd to highjack the thread ?
Why would I normally ignore fucking idiots like you ? Oh that would be because 1. I have a command of English normally reserved for people who were educated in England. 2. It is not considered polite to just ignore people despite it being incredibly rude to just interject yourself into what might seem to be a private (despite being held in public) conversation.
Polite people would wait for a natural break and then insert 'Excuse Me'' at which point conversation would halt whilst the interjector interupted.
At which point either party can eliminate the interjector with a 'Fuck Off, That's Not Relevent'
Last point applies
4th Rule
Greenskeeper_Carl
Interesting that you should call me a troll, I've been here off and on since 08, but you know that already.
Interesting name Carl, GreenKeeper, like black but green
Are your other names stone,weed (oh not that, a bit too close for comfort!)
Fuck me Carl how hard can this be, it is an Economics blog.
People who red this want to know how economics works
We know it is rigged, it has always been rigged
We want to know how the ordinary person can enter the market without being immediately ripped off.
Ordinary People (they would be the source of all wealth) want a free and fair market
Why cannot our politicians provide this ?
Okay Mr. Rocket. I read through the back and forth with the various folks here and you seem a tad dismayed that someone called you a troll.
Then you wrote this which kinda gives it away:
"Ordinary People (they would be the source of all wealth) want a free and fair market
Why cannot our politicians provide this ?"
No, ORDINARY people don't want a free or fair market. They want what their neighbor has and have no problem using a third party-the state-to do their dirty work for them.
And why cannot "our politicians" PROVIDE this? Well THAT gem shows it all. In a FREE MARKET and a FREE Society POLITICIANS do not PROVIDE anything.
Go back to the drawing board Bob. I for one do not care that you claim to be educated and follow some formal debate rules. Your arguments lack a basic undertanding of the state, government, and from where laws of economics stem.
Precisely. Oridnary people long ago figured out they could use their vote to get what belongs to others. Oridnary people trust their politicians to help them out, and politicians most definitely do not want a free market. What's the fun in being able to tell people what to do and then NOT DO IT? And ordinary people, sadly, don't know what a free market is anymore.
Greenskeeper_Carl
Thankyou for your post, it is most helpful, the responded are very wel informed
This item makes some valid points, but it completely fails to mention the fact that inflation favours debtors at the expense of creditors. The value of any money claim shrinks, decreasing the real claim of the creditor and making it easier (other things being equal) for the debtor to pay off the debt. During the period of the gold standard in the US during the 19th century a deflation occurred. This gave rise to debtors demanding the free coinage of silver, which was the battle cry of William Jennings Bryan in his unsuccessful try for the presidency.
Your point holds true if money was used to facilitate the loan. What if counterfeit was used instead?
Say the creditor just conjured the currency for the loan like from fractional reserves. Say the creditor receives currency back that depreciated by 5%. That means the thief just stole the entire principal of the loan paid back, plus interest, minus the depreciation. Whomever introduces the counterfeit into the economy exchanges nothing for something. Everyone's loss of purchasing power is always the thief's gain.
O, were this the economy of the 19th century!
If the debtor purchased real capital(e.g. a factory, a car, and education, etc...) with the counterfeit money and then returned the counterfeit money to the creditor(less depreciation), then it doesn't much matter whether the money was counterfeit or not. If people accepted the "counterfeit" money for goods and services, then the debtor gained, and if they didn't, the debtor wouldn't be paying the creditor back.
Nice try, big guy, but:
It does matter very much whether the currency is money or counterfeit.
If it is counterfeit, then it necessarily depreciates the value of the currency and everyone is a loser no matter where the counterfeit ends up or to whom it is passed on to do whatever it is used to do.
Point is it originated from never having produced a product to put in the economy to offset the increased amount of the currency. More currency, less product, is higher prices.
Those who are victimized by the creditors attempted theft don't care whether the thief succeeds or not in stealing the principal of the loan. The counterfeit has already been pumped into the economy and the value of the currency depreciated.
Inflation reduces the real return on capital. It affects those who derive their returns from investment the most, not the least. Permanently constraining the money supply to 100% covered in a growing economy restricts liquidity and increases cost of living for the poor, not to mention the effect on the currency and exports. Actually, no. Don't take my word for it. Let's do it the way Mr Hulsmann recommends, and we'll see where inequality is in 20 years time.
This kind of top-flight academic research is what keeps the University of Angers proudly at #2,186 in the global university ranking, comfortably behind such prestigious institutions as the University of Moratuwa, Sri Lanka, Shiraz University of Medical Science, Iran and the University of Khartoum, Sudan.
Well said, CC. In any attempt at a 100 percent cover of loans by deposits, there would be no expansion of the money supply through the banking system. That is why it has never been attempted, with the exception of those regimes that supply money directly from their Treasurys using the printing press. Can you imagine how things would be if our current congress were the only supplier of new money to the economy?
With interest rate near zero for wealthy, this article is correct.
When governments are indebted to the eyeballs, the "independent" central banks will ensure negative real interest rates. They can't afford reality anymore.
This guy doesn't understand money.
I don't need to mine in the ground to create money. Every time I make a loan I create money. Money is debt, not rocks and minerals.
Also, he says silly stuff like this:
"In a free market, paper money could not sustain the competition of the far superior metal moneys."
No one is stopping you from putting your money in gold and bargaining for groceries with gold nuggets. People don't do it because it is *inconvenient.* You want to ship a boxcar of gold across the country every time you make a large purchase?
But FWIW, gold and paper currencies *do* compete. You can see this competition in the exchange rates and the price of gold.
I would like to see an article that discusses in more detail the mechanics of inflation: how the issuance of new, "high-powered" money enters the economy and enriches the upstream recipients and impoverishes the downstream recipients. This would also need to include a thorough treatment of how we are avoiding hyper-inflation, because I would have thought that once you get to the point of printing money and buying your own credit and debt with it, the jig would be up.