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Old 08-20-2020, 10:56 AM
  #10  
rickair7777
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Originally Posted by SonicFlyer View Post
No, it's not.

Inflation is a consequence of government devaluing their currency. It started in ancient times, especially in Rome, when the treasury would take round coins and begin to clip the edges to reduce the amount of metal in the coin.

In more recent history the government would simply print more money making each dollar worth less. These days they don't even bother printing it, they just make it up out of thin air and add it to a ledger sheet. It's completely unaccountable as they don't even report M3 anymore.

Inflation is criminal.

If you want to learn more look up what economists Ludwig Von Mises and Murray Rothbard have to say about inflation.
Yes governments can and do cause inflation. As can outside events which effect the economy.

But inflation would happen regardless, with paper money. If your currency is rigidly backed by say gold, inflation would probably not happen naturally since a precious metal holds its value over time (subject to natural price swings).

Even precious metals are not utterly foolproof, if something changed the underlying value of the commodity to society you could get an associated step change in a backed currency. In the case of a precious metal that could be a black swan such as the (unlikely but possible) discovery of a massive reserve, or conversely a new industrial process which creates a vast new demand (something like lithium & batteries).

Unbacked currency is just a promise, and promises get weaker over time. Producers of goods and services will always prefer to deal with people who can provide goods and services in return, vice people sitting on a pile of old paper. Inflation is the quantifiable manifestation of that preference.
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