How They Sell Inflation

A key justification of the Fed – of Keynesian central banking – is that the way to make an economy grow is to print money. This is the “Philips Curve” – a tool that claims a trade-off between unemployment and inflation.

In that model, if you want economic growth, you print more money. If you printed too much and got inflation, you just print less. Typically by raising interest rates so banks create fewer loans.

The punchline, of course, is that central banks should print as much as possible, all the time.

After all, if printing money creates prosperity, everybody wants prosperity.

And then, when prices rise from all that printing, you just beg, borrow, and steal to calm pesky voters down enough to get back to printing.

Of course, for non-Keynesian economists – Austrians and free marketers – it’s a lot simpler: money-printing is counterfeiting. And, like all counterfeiting, it steals from everybody else’s dollar, pouring water into the wine of their life savings. With a kicker for economic distortions – recessions – caused by how the new money was printed.

The “Inflation is Prosperity” Fallacy

The inflation-is-prosperity fallacy has been internalized by the ruling class. For example, whenever I advocate sound banking – where the bank actually has the money in the vault – I get attacked by Wall Street types complaining that if banks couldn’t counterfeit via fractional reserve, the economy would freeze up.

So where does it come from? Simple: it’s confusing activity and wealth.

To illustrate, if Hunter Biden prints a million dollars and hits Vegas for the weekend, there will be a lot of very busy strippers.

It’s fantastic for the Las Vegas economy – tissue-fire level economic growth, an extra million in GDP in however many hours Hunter’s high lasts.

Of course, where did the money come from? It was siphoned from every other dollar holder. Diluted like water into wine.

So grandma pays a little more for groceries, but at least Hunter had a hell of a weekend.

Activity was created, wealth was not. And all that was left was the theft.

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