Inflation, the persistent rise in prices, is often portrayed as an unavoidable economic phenomenon. 

However, the truth is far more complex. 

________________________________________________________________________

• Inflation is caused by governments printing too much money, not by external factors like oil prices or corporate greed.

• When governments spend excessively and print more money, the value of the currency is eroded, leading to higher prices.

• Governments must stop excessive spending and printing money to combat inflation, and citizens should hold them accountable for fiscal responsibility.

________________________________________________________________________

How Governments Deliberately Fuel Inflation

Governments and their appointed experts frequently attempt to shift the blame for inflation onto various factors, obscuring their role in the process. 

In reality, inflation is a deliberate policy and a tool governments use to erode currency’s purchasing power and transfer wealth from the private sector to the state.

The Fallacy of External Causes

Governments often point to external factors, such as oil prices, as the culprits behind inflation. 

However, this is a misleading narrative. 

Like other commodity prices, oil prices are not the cause of inflation but rather a consequence of currency debasement. 

As more units of currency flood the market, prices of relatively scarce assets, such as oil, naturally increase. 

If oil prices were truly the cause of inflation, we would witness rapid fluctuations between inflation and deflation rather than the consistent annual rise in prices.

The Monopoly of Currency Creation

The government’s monopoly over currency creation is the root cause of inflation. 

While banks can generate credit through lending, they are constrained by the need for projects and investments to support these loans. 

In contrast, the government can issue more currency to mask its fiscal imbalances and bail itself out. 

Through regulation, legislation, and coercion, the state imposes the use of its own form of money, regardless of the real demand for it.

The Myth of Corporate Influence

Some experts argue that large corporations are responsible for driving up prices. 

However, this assertion fails to recognize that monopolies cannot simply raise prices without facing consequences. 

In a competitive market, destructive and inefficient monopolies would be challenged by competition, technological advancements, and cheaper imports. 

The only monopoly that can force consumers to use its product, regardless of demand, is government fiat money.

The Path to Price Stability

Governments have the power to curb inflation by addressing the root cause: unnecessary spending that leads to deficits. 

By eliminating excessive expenditures, governments can stabilize prices without resorting to harmful measures like taxing the private sector. 

Trying to combat inflation through taxation is akin to starving children to make an overweight parent lose weight—it is both ineffective and unjust.

The Fallacy of Modern Monetary Theory

Modern Monetary Theory (MMT) proponents argue that governments can issue currency without limits, with inflation being the only constraint. 

However, this notion fails to acknowledge that inflation manifests as an unsustainable fiscal problem, reflecting dwindling confidence in the currency issuer.

Governments cannot simply tax away the inflation they have created through excessive spending, as this would only further weaken the private sector and worsen the economic situation.

Inflation is not an inevitable economic phenomenon but a deliberate government policy. 

By deflecting blame onto external factors and obscuring the true causes of inflation, governments perpetuate a cycle of currency debasement and wealth transfer from the private sector to the state. 

To achieve price stability, governments must address the root cause of inflation: excessive spending and deficits. 

Only by restoring fiscal discipline and respecting the purchasing power of currency can governments truly serve the interests of their citizens and foster a thriving economy. Subscribe to our newsletter here.