Another look at Inflation.

3 posts / 0 new
Last post
Thomas Hedin's picture
Thomas Hedin
Status: Platinum Member (Offline)
Joined: Jan 28 2009
Posts: 815
Another look at Inflation.

A Close Look at The Theory of Inflation

By Byron Dale

 

Webster’s New World College Dictionary states: Inflation – (a) an increase in the amount of money and credit in relation to the supply of goods and services.  (b) an increase in the general price level,  resulting from this, specif., an excessive or persistent increase, causing a decline in purchasing power.

 

Let’s assume for the moment that Webster’s definition is correct.  If it is we need to address the issue of how and on what basis did the amount of money and credit increase without there being an increase in the goods and services.  This increase in money and credit could not arise due to the need to pay for any existing goods or due to the need for more money or credit to purchase any increase in goods or services.  

Black’s Law Dictionary defines Credit as “Time allowed to the buy of goods by the seller, in which to make payment for them.” –“The right granted by a creditor to a debtor to defer payment of debt or to incur debt and defer its payment.  

According to this definition there would need to be an increase in the amount of goods and services coupled with a shortage of money needed to obtain those good or services before there would be any need for credit at all.  All most every one is has the lawful authority to create goods or provide a service.  At this time only banks have the lawful authority to create money.........

To read the rest of the article follow the link below.  It's an interesting read.

http://www.wealthmoney.org/Inflation.html

DrKrbyLuv's picture
DrKrbyLuv
Status: Diamond Member (Offline)
Joined: Aug 10 2008
Posts: 1995
Re: Another look at Inflation.

Thanks for the great article Thomas.

I think "inflation" may be the most be the most ambiguous term used in economics.  Prices go up for many reasons beyond adding more money into circulation.  For example, higher business interest rates are passed onto consumers.

One variable seldom accounted for is the constant destruction of money.  When bank customers repay their principal debt that money is extinguished - it ceases to exist.  Everyday, there is a significant amount of money extinguished - new debt money must be added to prevent the money supply from contracting.

As okubow pointed out in an earlier thread, the system is not balanced - What Would We Do Without Credit?

I think it is safe to say that a debt based money system is "deflationary" by nature.

Larry

Thomas Hedin's picture
Thomas Hedin
Status: Platinum Member (Offline)
Joined: Jan 28 2009
Posts: 815
Re: Another look at Inflation.

One variable seldom accounted for is the constant destruction of money.

 

I wonder if it's because most people just can't wrap their heads around the idea of destroying money and why it benifits the banking system.

Everyday, there is a significant amount of money extinguished - new debt money must be added to prevent the money supply from contracting.

Yes, and in that process the principle is destroyed, but in order for one borrower to get out of debt his interest load has to be shifted onto another borrower, and the debt keeps growing, and growing, and growing.

As okubow pointed out in an earlier thread, the system is not balanced - What Would We Do Without Credit?

 

Without Credit (credit is the true money in our system) we would not have one dollar or one penny in circulation.   This could change though if we pass laws like the Minnesota Transportation Act.

Comment viewing options

Select your preferred way to display the comments and click "Save settings" to activate your changes.
Login or Register to post comments