- “As the late Nobel Laureate Professor Milton Friedman said, ‘[I]nflation is always and everywhere a monetary phenomenon, in the sense that it cannot occur without a more rapid increase in the quantity of money than in output.’ Thinking of inflation as rising prices permits politicians to deceive us and escape culpability. They shift the blame saying that inflation is caused by greedy businessmen, rapacious unions or Arab sheiks. Instead, it is increases in the money supply that cause inflation, and who is in charge of the money supply? It’s the government operating through the Federal Reserve Bank and the U.S. Treasury. … The founders of our nation feared paper currency because it gave government the means to steal from its citizens. When inflation is unanticipated, as it so often is, there’s a redistribution of wealth from creditors to debtors. If you lend me $100, and over the term of the loan prices double, I pay you back with dollars worth only half of the purchasing power they had when I borrowed the money. Since inflation redistributes (steals) wealth from creditors to debtors, we can identify inflation’s primary beneficiary by asking: Who is the nation’s largest debtor? If you said, ‘It’s the U.S. government,’ go to the head of the class. … Profligate spending burdens future generations by making them recipients of a smaller amount of capital and hence less wealth.” –George Mason University economics professor Walter E. Williams
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