Money, Debt, and Inflation
Money—Gold is money, everything else is credit. J.P. Morgan (1912)
Credit—An I owe you (I.O.U), debt.
U.S. Dollars—I.O.U.s issued by the U.S. Federal Reserve Bank (debt) in return for U.S. Treasury debt instruments.
Debt—Money/value owed. Owing a debt makes one a debtor. Owing a large debt makes one an enemy.
Enemy—Someone you can’t trust with your money.
The United States government is the world’s largest debtor.
During times of inflation, debtors gain and creditors lose because the debtors are repaying their debts with dollars of less value than those they initially received.
Inflation (incentive)—makes it easier to repay an existing debt.
Inflation (cause)—an expansion of the currency supply.
Inflation (effects)—higher prices, lower purchasing power, less long-term planning, mis-allocation of resources, wealth consumption, more tax owed because of bracket creep, more government intervention because of calls for the government to “do something,” and social upheaval.
Inflation (long-term consequences)—loss of trust in that currency, destruction or flight of wealth, impoverished citizens, and socialism.
Inflation (protection from)—acquire some real money (gold or silver).
Robert F. Sennholz