Inflation: The War Against Money
It’s a two-pronged attack:
- People are forced to accept a money-substitute instead of money; and
- Propaganda is used to convince them that the money-substitutes (paper money) are OK—confusion reigns.
Money is something of value that is recognized by many people. Traditionally this has been gold and silver. Why? Because they have done the best job of maintaining value over long periods of time. More recently, money substitutes have been developed for convenience sake; i.e., it’s easier to carry around a piece of paper that represents an ounce of gold than it is to carry around the gold. Of course, the problem arises when the paper is no longer redeemable into something of value.
History is replete with examples of countries that have started out with a valuable money and gradually replaced it with a less valuable substitute. France did it in the 1790s, Germany in the 1920s, Hungary in the 1940s, Yugoslavia in the 1980s, and Zimbabwe in 2008. Each time, the central bank expanded the supply of money-substitutes until they became worthless. Each time, people were required by law (legal tender laws) to accept the money-substitutes until they became worthless. Each time, most people were impoverished because they didn’t realize what the government was doing to their “money.”
The reason they didn’t know what was happening was because the government launched a campaign to keep their citizens ignorant. Each time, the government and its cronies (mainstream economists) blamed anyone they could possibly think of as the culprits while they themselves were causing the problems and benefiting the most from the destruction of the currency and the transfer of wealth that occurs when people are required to give up things of value in return for the devaluing money substitutes. Some of the favorite whipping boys are speculators, greedy businessmen, hoarders, un-patriotic souls, and tax dodgers. In reality, they attacked anyone who was smart enough to figure out what was really going on and protect themselves from the legal plunder. And the more successful these survivors were at exposing the culprits, the more they were vilified and attacked as the cause of the problem.
Because most people don’t understand that inflation is expansion of the money and credit supply, they were duped into using the money substitutes until they became worthless. And when they didn’t have anything left, they cast about and attacked the few remaining people who were smart enough to preserve some of their wealth. Ultimately, 95% of the wealth either fled the country or was destroyed. Trade became impossible, and a wave of jealousy overcame the people. In the end, neighbors turned on each other until nothing was left to consume.
However, today, we have the information age and the truth will leak out. And as it does, more and more people will hedge against the decline in the value of the money substitutes. There will be a rush to tangible assets and barter. And people will come to understand that inflation is the expansion of the money supply (or money substitutes) and that this expansion, coupled with the legal tender laws (requiring people to accept ever-depreciating paper money), is what is destroying their wealth.
Robert Jackson Smith