Rothbard wrote an easy book with an awkward title, but makes a point everyone should know: with inflation, the first in line (bankers) benefit most and the last in line are hurt the most (Patty Paycheck.)
Since inflation properly defined is the RESULT of printing too much currency, there is also a process before the result, a process that takes time. It's time that does the trick for the rich, that harms the poor. The process of too much currency spreading out through the economy, introduced at the bank level and finally paid out to a wage earner begins with the banker extinguishing old bank debts with newly conjured currency. The old bank debt was denominated in units of the currency before the new currency was introduced.
If the entire economy was $20 and ten loaves of bread, then each loaf would be worth $2.
If I were to introduce another creditable (but unwarranted) $5, then (20 + 5 = 25) the economy would be $25 and ten loaves of bread, or each loaf is now worth (or costs) $2.50.
Here is the trick, as the banker, I quietly print another $5, use $2 to pay off my debt on (or just buy) a loaf of bread. Now, I have no debt, I own a loaf of bread. I then release the remaining $3 into the economy. Now we have (20 + 3 = 23)/10 loaves = $2.33 each loaf. The banker pays $2, you pay $2.33. Heck, you hardly even notice. It hardly seems worth it.
Until you understand it happens in a trillion dollar economy. And when you have to buy things, and you find the price is higher in the case of gas, and the same price as before but for a smaller loaf in the case of bread, you experience what the bankers call "cooking the frog slowly." You hardly notice the warming of the water.
(Wait..wait... if this is so, then why don't people just watch the printing presses and figure out what is going on, and then front-run for personal benefit. They did, so the banks stopped telling us they were printing.)
Now this is such a good racket that banks create this credit to lend to businesses, especially big ones who make what we must buy: food clothing shelter gas etc - General Motors General Foods General Electric Shell. The problem is these big businesses no longer make what anyone wants to buy, but they have starved out competitors with their regulations against competition and relatively cheap money.
Frank Shostak covers this well...
Contrary to popular thinking, loose monetary policy, which leads to a misallocation of resources, weakens the economy’s ability to generate final goods and services, i.e. real wealth.
Here is the problem... what is your alternative?
And the state knows this will end badly, so the state is at once arming itself and trying to disarm the citizens. Civil war ahead, if for no other reason that what goes around comes around. If we foment civil wars world wide we should expect it to come here.
Which suits those who foment civil wars. The best way to resist all of this is to get customer-employed (I no longer say "self-employed") and resist the big bad companies by competing. It would be a terrible struggle to make cheese, or whatever, today. But it can be done, and it would be crazy to join in on the coming violence.
But two things will happen. The price of Big Cheese will shoot up far higher than craft cheese, making yours profitable for you, and available. And when the craziness has past, we'll still know how to make cheese.
Feel free to forward this by email to three of your friends.
Since inflation properly defined is the RESULT of printing too much currency, there is also a process before the result, a process that takes time. It's time that does the trick for the rich, that harms the poor. The process of too much currency spreading out through the economy, introduced at the bank level and finally paid out to a wage earner begins with the banker extinguishing old bank debts with newly conjured currency. The old bank debt was denominated in units of the currency before the new currency was introduced.
If the entire economy was $20 and ten loaves of bread, then each loaf would be worth $2.
If I were to introduce another creditable (but unwarranted) $5, then (20 + 5 = 25) the economy would be $25 and ten loaves of bread, or each loaf is now worth (or costs) $2.50.
Here is the trick, as the banker, I quietly print another $5, use $2 to pay off my debt on (or just buy) a loaf of bread. Now, I have no debt, I own a loaf of bread. I then release the remaining $3 into the economy. Now we have (20 + 3 = 23)/10 loaves = $2.33 each loaf. The banker pays $2, you pay $2.33. Heck, you hardly even notice. It hardly seems worth it.
Until you understand it happens in a trillion dollar economy. And when you have to buy things, and you find the price is higher in the case of gas, and the same price as before but for a smaller loaf in the case of bread, you experience what the bankers call "cooking the frog slowly." You hardly notice the warming of the water.
(Wait..wait... if this is so, then why don't people just watch the printing presses and figure out what is going on, and then front-run for personal benefit. They did, so the banks stopped telling us they were printing.)
Now this is such a good racket that banks create this credit to lend to businesses, especially big ones who make what we must buy: food clothing shelter gas etc - General Motors General Foods General Electric Shell. The problem is these big businesses no longer make what anyone wants to buy, but they have starved out competitors with their regulations against competition and relatively cheap money.
Frank Shostak covers this well...
Contrary to popular thinking, loose monetary policy, which leads to a misallocation of resources, weakens the economy’s ability to generate final goods and services, i.e. real wealth.
Here is the problem... what is your alternative?
And the state knows this will end badly, so the state is at once arming itself and trying to disarm the citizens. Civil war ahead, if for no other reason that what goes around comes around. If we foment civil wars world wide we should expect it to come here.
Which suits those who foment civil wars. The best way to resist all of this is to get customer-employed (I no longer say "self-employed") and resist the big bad companies by competing. It would be a terrible struggle to make cheese, or whatever, today. But it can be done, and it would be crazy to join in on the coming violence.
But two things will happen. The price of Big Cheese will shoot up far higher than craft cheese, making yours profitable for you, and available. And when the craziness has past, we'll still know how to make cheese.
Feel free to forward this by email to three of your friends.
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