Playful thoughts #6: On the insidious effects of inflation
Inflation can be seen as a hidden form of taxation. It is the practice of the expansion of the money supply and its consequence is the devaluation of money.
The effect of inflation takes place over a period of time in which the earliest spender has the advantage of spending the new money against a higher value. Hence the beneficiaries of inflation are mostly governments and large financial institutions as they receive the money first.
By the time money is disseminated far enough into the economy and reaches the average citizen, it already has lost much of its purchasing power. Most people are unaware of this insidious and fraudulent effect of inflation.
It is a means of the government to secretly confiscate an important part of their citizens’ wealth for the benefits of the privileged few. Even the economist John Maynard Keynes, who himself was a great supporter of government induced inflation, admits that:
Finally, after thousands of years of coin shaving, alloying, printing, and rehypothecating....we have cryptocurrency.
It's not looking good for the pushes of seigniorage.
It's looking very bad for central planners of money. :)
Their plan to mostly ignore cryptocurrency seems to be backfiring in the "first they ignore you, then they laugh at you" sort of way.
Inflation is definitely a hidden tax. Politicians love inflation because most people don't understand it, and it gives politicians a sneaky way to avoid raising taxes directly. Instead, they use inflation as an indirect tax, the public is unaware, and that politician gets reelected into office. Central bankers love it because the interest allows them to reap huge profits...out of nothing. Fiat currency and fractional banking is the biggest Ponzi scheme of all time. Long BTC and Cryptos!
Thank you for your comment. :)
I agree: fiat and fractional reserve banking is the biggest Ponzi. Hope we can force the system to change with crypto.
good post my friend
upvote.
Thanks! :)
Which is, I believe, the most convincing argument for why crypto is the future. Money is itself a tool of freedom to me. If you were a bean farmer and that was your only product, you would have a hard time trading for things if the other person doesn't like beans. Money is transferring your labor into a liquid commodity that has the same value for anyone. But when a bank, government, or other central authority has complete control over the currency they have the power to manipulate it to their own advantage and steal the labor of the people. Keynes seems to be admitting this and agreeing with Lenin in the quote. It's almost like he was advancing his economic system because he thought it would eventually ruin free-market-friendly countries...
Keynes was a cancer to economics. Anybody who significantly deviate from Ludwig von Mises is not an Economist. Just a cancer on society when we consider the long term effects.
Haha ok, those are very hard words for non-Keynesians. :D
But yes, Ludwig von Mises was a genius to say the least!