Problems with Inflation

A nice overview of the problems with inflation from Reddit:

Inflation is a monetary phenomenon; The creation of new money causes a rise in prices, but it doesn’t happen instantaneously because money flows through the economy and prices are a discovery process. When the government prints new money, the first people to get the new money are the government and the banks. They can spend today’s money at yesterday’s prices. When the money finally gets to you and me, we have to pay tomorrow’s prices.

Not only that, but it’s only due to inflationary institutions like the Federal Reserve and other central banks that governments can borrow enough money to create massive death machines that wreak havoc like WWI, WWII, Vietnam and any other number of horrific conflicts that have plagued the last century through today.

Inflation harms us by robbing people of the value of their money. You might earn 100x more than you would have a century ago, but the money you save is worth less. Inflation harms us by causing rising prices faster than rising wages (stickiness, if you want to get specific). And inflation harms us by expanding the reach and power of government to wage war and inflict death.

— vagabondvet

Advertisements

Leave a Reply

Please log in using one of these methods to post your comment:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s