4th Cause of Inflation? The Government…

A while back, I outlined the 3 main causes of inflation on my website.  And from an economics perspective, those causes are spot on.  However, there is a monkey wrench that I forgot to mention: the government.

By a continuing process of inflation, governments can confiscate, secretly and unobserved, an important part of the wealth of their citizens.

By this method, they not only confiscate, but they confiscate arbitrarily, and, while the process impoverishes many, it actually enriches some.

The sight of this arbitrary rearrangement of riches strikes not only at security, but at confidence in the equity of the existing distribution of wealth.

Those to whom the system brings windfalls . . . become ‘profiteers’, who are the object of the hatred of the bourgeoisie, whom the inflationism has impoverished not less than the proletariat.

As the inflation proceeds . . . all permanent relations between debtors and creditors, which form the ultimate foundation of capitalism, become so utterly disordered as to be almost meaningless…

– John Maynard Keynes

Basically, Keynes is saying that governments can prolong the effects of inflation, if it will “help” certain groups/factions. These “haves” are far outnumbered by the “have nots”, who are negatively impacted by prolonged inflation. The “have nots” become increasingly dissatisfied with the “system”, thinking that it’s rigged for the “haves”.

In the end, trust goes out the window.

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1 Response to 4th Cause of Inflation? The Government…

  1. June says:

    Timely comment.

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