Inflation is Interest, Deflation is Theft

Inflation would be an ideal progressive tax if it were a tax, if  monetary expansion funded government rather than aristocrats. Inflation is a progressive tax which taxes the wealthy the most, unless they put their wealth to productive use. Inflation encourages investment and creates jobs. Inflation is the perfect progressive tax which encourages production and creates jobs. During the Great Depression, local communities used intentionally inflationary scrip, such as the Worgl Scrip, to get their local economy moving. They worked.

If your average daily balance is $2000, you pay $60/year for the cost of a 3% inflation rate. If your average daily balance is $1,000,000, you pay $30,000/year for the cost of a 3% inflation rate. If you put your money to work by putting it into a savings account or buying bonds, you avoid the cost of inflation. If you invest, produce, hold inventory, or hold debt, all costs of inflation are negated, and most people actually receive a benefit due to inflation. Inflation is interest for not completing an economic transaction. If you sell $1,000,000 in products and services and don’t use the money to complete the barter exchange by buying $1,000,000 in products and services or by putting the money to work, you owe interest to the public for holding onto a portion of the public money supply.

Inflation under our current system results from the expansion of bank credit beyond the ability of the economy to expand to put the credit to work. Since the new money supply is interest-bearing credit, inflation is literally interest. There is interest owed to privates banks, to bond holders, and those who provide savings. Those who benefit from inflation itself are those who hold debt, who have invested in production, and anyone who holds anything of value other than cash. The only person who does not benefit from inflation are those who hold idle money. The problem in our current system is that the inflation is interest-bearing debt.

Inflation makes debts cheaper and investment in production and inventory cheaper. When you start to include the benefits of inflation to those who produce, who hold inventory, and who have debt, most people don’t pay any interest due to inflation. Inflation costs most people nothing and actually provides a positive benefit to most people. Inflation has no costs, only benefits. Inflation or monetary expansion is the spark, oxygen, gasoline, coal, and wood in the fire of human action. It is the giver of economic life. It gives more and more people the opportunity to engage in economic activity. Without some kind of inflation or monetary expansion, there would no economy.

The only negative to inflation is when inflation rates are too high and when inflation is corrected with a bust because the inflation is the result of expansion of bank credit through fractional reserve banking, when the interest on the expansion of credit can no longer be paid and absorbed by economic growth. If fractional reserve banking was ended and replaced with a true debt-free public monetary system, like the Greenback or Continental, the government could not only pay off the national debt and significantly reduce taxation, the government could end the boom/bust cycle, which results from debt-based and commodity-based monetary and banking systems. Inflation could be easily controlled from being too high, primarily because wealthy interests would lobby against it rather than for it, and result in nothing but benefit for everyone. Necessary monetary expansion for economic growth could fund government rather than the usurer. Inflation would not need correction with a credit contraction since there would be no interest-bearing debt associated with it. It only needs to be corrected by economic growth.

One complaint about inflation is that wages seem to stagnate while the cost of commodities seem to increase. This is true for developed nations with poor monetary and banking systems based on bank credit and/or commodities and for developed nations with poor tax systems which tax labor and capital rather than land and natural resource values and which do not have progressive tax systems, allowing the wealthy to sit on vast sums of the public money supply, forcing the rest of the economy into economic stagnation.

When domestic production and labor is punished and consumption is not punished, the jobs are going overseas. The developing nations have the jobs and consume more of the commodities. The wealthy also monopolize the land and natural resources. The cost of commodities, land, and natural resources increase relative to wages in the developed nation. Taxing the supply of labor and capital rather than taxing the demand of natural resources and land is going to result in economic destruction in global economies. It is going to result in stagflation for the developed nations who have such backwards tax systems.

Now we come to deflation. Deflation isn’t just a tax. It is just pure theft. Anyone who holds money, whether it is gold, debt, or debt-free money, will gain at the expense of anyone who holds anything of value other than the deflationary currency, anyone who has invested into production, and anyone who has debt. Those who hold money are stealing free lunches from everyone else. Not only is deflation theft, it is purely destructive. There is no economic benefit to deflation. Deflation discourages investment and production. Deflation destroys jobs. Deflation destroys value in everything but the currency.

Fortunately, most of this is common sense to common people. Most people with a high school education in economics know that deflation is bad and was the primary cause of the Great Depression. They also know that inflation is necessary for economic growth.

Unfortunately, George Soros, the Church of Scientology, the Rockefeller Foundation, the Kock Brothers, Peter Thiel, the William Volker Fund, the Ludwig von Mises Institute, the Austrian School of Economics, and the Libertarian Party are hard at work trying to brainwash people into believing the opposite. They are hard at work trying to get people who hate government and who love free markets to believe that the government should corrupt commodity markets and declare gold to be legal tender. They want the government to become commodity traders. They want the government to favor one basket of commodities over another basket of commodities. Some even want the government to force banks to issue bank credit with partial reserves of commodities or legal tender.

These “libertarians” want a strong dollar. They want a dollar backed by gold. They want a dollar which increases in value. They want a dollar which is deflationary. They want to steal a free lunch with the help of government declaring certain commodities, especially gold, to be money. They want to profit on a deflationary depression. They want to discourage investment. They want debts to become more expensive. They want inventories to be worth less. They want to gain wealth by doing nothing except for holding gold and lobbying the government to make it artificially worth more by declaring it to be legal tender.

Beware of “libertarians” who claim inflation is a tax and who claim inflation is theft. These so-called “libertarians” are hypocrites looking to steal a free lunch with the corrupting hand of the government. These “libertarians” want to destroy free markets in gold and destroy economies so they can steal a free lunch by doing nothing. They are not the classical liberals of the Founding Fathers. They are the classical conservatives for King George’s feudalism.