Inflation is a sneaky form of taxation

My father’s annual salary as a college dean was $1500. With that he bought a new 1934 Chevrolet for $500. He rented a house with an eat-in kitchen, porches, a garage, and a garden that provided most of our vegetables for $20 per month. Five cents would buy a candy bar, ice cream cone, pack of chewing gum, telephone call or music on a juke box.

What happened?

Government replaced gold coins and silver dollars with pieces of paper on which it could print any dollar amount that it chose, smaller silver coins with tokens made of cheap metals and copper coins with ones made of an even cheaper metal.

It inflated the money supply and put that money into competition with your money. That caused your money to buy less and less. Analyst Martin Weiss calculated, using the governments own understated measure of price increases, the CPI, that the dollar has lost 93.6 persent of its purchasing power since 1940. Richard Maybury used privately developed figures and calculated that it has actually lost 98 percent.

Monetary inflation is a sneaky, misleading way of taxing. The majority of people are hurt by monetary inflation, but someone who understands it can profit from it. Proverbs 27:12 says that the prudent see danger and take refuge: but the simple keep going and suffer for it. We can’t control monetary inflation, but we can profit by understanding it and acting on that understanding.

Roger Clites