Refuting "Economic Suicide"

Organized Exploitation ^ | 09-01-2009 | Paul Kroenke

[aic4ever]

Inflation is always and everywhere a monetary phenomenon. These are the words of Milton Friedman in A Monetary History of the United States. The meaning of those words is that no matter what, inflation is a function of the amount of money available. Inflation occurs when more money is introduced into the supply. When this happens, the real value of the money goes down. This is the reality. The face value perception is that things begin to "cost more." Physical things actually still hold their same value, it is the money, due to inflation, that has lost its value, meaning that it takes more of that money to buy the same thing. Nowhere was the phenomenon of inflation, and indeed hyperinflation, more evident than in the Weimar Republic, where we find the famous historical incident of it costing a wheelbarrow full of money to buy a loaf of bread.

I bring up a brief discussion on the nature of inflation in response to possibly one of the most foolish articles I have seen lately. At Seeking Alpha, Henry Bee writes that Auditing the Fed is Economic Suicide. In an incredible feat of intellectual gymnastics, Bee lays down the accusation that somehow the public knowing what is happening with the money supply will be the end of the free market.

[mbs6]

Inflation is one of the most insidious tools of government. It is literally a tax on cash balances and this tax can be withheld without a vote or even a physical tax collection. No wonder the government is so interested in obfuscating and muddying the issue so that few understand it.

Even in business school they teach inflation is the “price of things going up.” But there is a critical difference between the price of things going up due to real supply and demand market forces (this is not inflation) and the price everything going up due to government inflation of the monetary supply (this is inflation).

We need to drill it into the heads of our children that inflation is a function of government.

[Vaduz]

Agree inflation is a function of government I wager October we shall see it first hand wonder of msm will have blinders on?.