Inflation is a secret tax on the poor
There are many ways you can raise money to do expensive things.
- You can borrow it. Examples are directly taking a loan with the promise to pay it back plus interest or a company selling shares which hold a promise for a share of future profits and ownership in the company's assets.
- You can earn it. Do useful work and get paid money for that work or for the goods and services you produce.
- You can take it. Direct theft. Taxes kind of toe the line of theft and earning. In theory, the government earns my taxes by keeping it's jurisdiction safe and secure. This isn't a problem to me unless I'm not allowed to exit or have a voice in how the government is run if I no longer like the deal I'm getting, then it crosses over into theft.
- You can make new money. Money printing. Illegal counterfeiting. Debasement. In the old days, you might take 1000 gold coins, melt them down, mix in some copper, and then have 1200 new coins. Today, we just type a number in a database.
Number 1 and 2 are perfectly respectable ways to collect money, so long as the dealings and rules in place are fair for all parties involved.
Number 3 is obviously bad. Almost everyone can agree that taking things without consent is bad for building a productive society. I'm ignoring the debate over taxes for this exercise.
Number 4 is insidiously bad. It's insidious and poisonous precisely because it's not obviously bad.
After all, by expanding the money supply, you're not DIRECTLY stealing anything from anyone. I still have exactly the same total amount of money in my bank account, so no harm, no foul, right?
But it is stealing. It's not stealing the money you have, it's indirectly stealing what the money represents, which is proportional purchasing power in an economy.
The people this form of theft hurts the most are those who simply don't understand money. It hurts the poor and middle class, who keep a large percentage of their wealth in cash and savings accounts, because they don't have the time or education to know how to invest it. Or don't have enough to even start investing it because of high cost barriers to entry.
The rich get this. That's why they hold as little money as possible in fiat currency and instead hold things that are hard to debase, like desirable real estate, gold, stock, rare art, etc.
And the poor are left confused why the number in their bank account or salary keeps going up, but their lifestyle keeps degrading.
Money printing is insidiously bad because it works to maintain and even accelerate wealth disparity.
Inflation is a secret tax on the poor.
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from Bitcoin - The Currency of the Internet https://ift.tt/36IOSk6
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