Dear Readers,
The last blog was about money creation and can be easily resumed as follows:
Money is debt and debt is money. Our Money is lent to us by the private central bank in our country at interest. Money is created and multiplied out of thin air through the fractional reserve banking system. The national debt is nothing but the money supply of a certain country. The money that we owe to the central bank is always more than the money we have circulating in the nation. This puts the central bank into the position of printing money because the money that we owe them doesn't physically exist and the fact that more money than needed circulates in the country creates inflation. This is why prices are constantly rising. People often tend to say that prices rise because of inflation. That's wrong, because inflation is the increase of prices itself so it can't be its own cause.
So, now that we went over money and inflation, let's see the effects of this monetary system on our society.
First of all, bankruptcies are unavoidable. Actually, they're incorporated into the system because money randomly circulates and someone will always not to be able to pay his or her loans. Remember, money is created out of loans.......
Another terrible consequence of inflation is the desperation that it creates in people's hearts. As prices rise and wages remain stable, work competition takes place and people are willing to work for lower wages to make money and essentially buy things that are cheap, not durable and useless. We’ll go over this in our next economics blog. For now, let's analyze inflation from a financial point of view.
So, people work for less money, corporations and multinationals pay less for the work, products are cheaper and people buy more even though they have less money. This illusive effect that inflation has on our society is due to the fact the very first characteristic of inflation is to be illusionary. Inflation is a hidden tax on the public. It hits us perpetually as a hidden (and therefore illusionary) tax.
This is why I would like to attach a YouTube video in this blog in which Ron Paul, debating with Ben Bernanke, makes the latter actually admit that inflation is a hidden tax.
After watching the video, please take a minute to answer the following question: How in the world do you stop inflation, which is basically the increase in the supply of money, by printing more money and basically creating more inflation?
Thank you all,
Also email us for any question @ newfinancialtimes2011@gmail.com
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