Buying Into the Con

The Inflation Rate

By Robert Ringer

When government puts out propaganda on the "inflation rate," it is really talking about the "consumer price index." But the consumer price index is misleading, because it covers the prices of only a few hundred items out of thousands, and many of those thousands may play a bigger role in your life than in the lives of others.

More important, however, is that the so called inflation rate does not tell you the rate of inflation at all. As previously noted in this series, the rate of inflation is the rate at which government increases the supply of paper money. And by referring to an increase in the consumer price index as the inflation rate, government avoids discussing its irresponsible and fraudulent increase of the paper-money supply.

Why is this little game of government engineered semantics so important? Because it confuses almost everyone, so much so that all but a small percentage of the population does not understand the true cause of rising prices. And it is rising prices that people are concerned with — i.e., they are concerned with the result of inflation.

If most people understood that it is the inflation of paper currency that falsely increases prices, they undoubtedly would revolt against the reckless printing of money. Which is why the semantics charade — and the resulting confusion — is so important to the government.

So long as people can be led to accept false explanations of what causes prices to rise, they can be made to believe in false solutions. Which gives de facto power to politicians, because it is they who peddle the false solutions to increase their own power.

Why do prices rise when government prints too much money? Again, money is not wealth; money is only a medium of exchange. Wealth is television sets, automobiles, and whatever else you exchange the medium for. Wealth can be produced only by labor. Today's money, however, is produced by simply printing pieces of paper, which increases the inflation rate.

The result is that when the Federal Reserve prints up money faster than people can produce wealth (products and services), the ratio between available money and available products and services increases. The supply of money, increasing faster than the production of goods and services, increases the demand for the available goods and services, which, per the law of supply and demand, stimulates prices to rise.

And regardless of who heads up the Demopublican Party, the one thing of which you can be certain is that the printing presses are going to have to roll faster than ever in order to meet their promises to Americans addicted to false prosperity — and thus increase their power over bewildered Mr. Main Street.

(In case you're wondering why the government can't just go back to the well indefinitely and continue to borrow its way out of Financial Judgment Day, even the Chinese are not dumb enough to fund such multi-trillion-dollar schemes as "universal health care," given that they already hold trillions of dollars in U.S. debt that can never be repaid.)

Next: We'll revisit the shoemaker and hatmaker mentioned in Part II of this article, and see how this massive federal fraud affects each of them.

Previous - Money VI - The True Cause of Inflation: the Measure of the Inflation Rate

Next - Money VIII - The Shoemaker and the Hatmaker, Revisited: The IOU

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