What is inflation? Most assume it’s a rise in prices — caused by greedy, mean people who want to make money.
Not so fast.
According to classical free market economist Ludwig von Mises, inflation is an increase in the money supply, not the resulting general rise in prices. He argued that this increase in the quantity of money (whether by central banks or fractional-reserve banking) devalues the currency, leading to more money chasing the same amount of goods, which then drives up prices and wages. Mises believed this process inevitably diverts resources, distorts the economy, and can ultimately lead to a complete breakdown of the currency system or a severe economic slump.
The money supply could not increase relative to demand — at least not long term — without a government control over the currency. It’s important to remember that America did not have this government control over the currency until the 20th century. That’s when the boom-and-bust cycles became normal, rather than the exception.
We don’t really have a free market economy in America. We have more of a free market than, say, Cuba or Venezuela. We’re not fully politicized — yet — like Communist China. But we’re very close. The Democratic Party aims to finish the job and make our economy government-controlled, as is China’s. Most of the established, long since paid off Republican politicians are little better.
So remember: the next time you hear about inflation, don’t think of mean people raising their prices. To any person with a business, the right price is what you can get. You’re not “mean” for raising your prices, nor are you “nice” for lowering them. That’s not how economics works — not in a free market, and not anywhere.
Inflation happens because government wants an increased money supply. This allows more money for themselves (think Nancy Pelosi), but it also allows more money to distribute to loyal people and programs to keep these career politicians in power.
Inflation is not the product of a free market. It’s the product of a society and economy consumed by nasty, rotten corrupt politicians — and the Imperial City they have created in and around Washington DC, and now globally.
Until we get rid of them, we’re not going to get rid of inflation.