Letter: On inflation and rising prices
We have heard the word inflation misused so often we just assume it to mean rising prices. But actually, inflation is the cause of rising prices. Inflation is an increase or inflation of money in the marketplace.
When government wants to spend money it doesn’t have, there are options as to how to come up with it. One is to float bonds; another is to borrow the money at the price of paying interest.
A third, in America at the federal level, is to print more money. That is the equivalent of me just taking my checkbook and writing in a deposit of however much I happen to want without making a deposit and the bank honoring it. Of course, I’m not able to do that—but our government does by putting more money in circulation. The result is the inevitable law of supply and demand. When there are fewer dollars vying for goods and services, prices go down; when there is more purchasing power, prices go up.
Right now we are facing a huge national debt, and we hear much about it being passed on to our children and grandchildren. And, certainly that is a concern. But it is wishful thinking that the effects won’t be felt before then. The printing presses are presently going full speed ahead to pay for what has been legislated and that is inevitably causing prices to rise. The results are more gradual and therefore more easily tolerated.
When gasoline prices go up quickly and dramatically, as they are now, people are, rightly so, concerned and eager to take corrective measures. But, when prices go up a little here and a little there, the tendency is to overlook it. Consider the automatic acceptance of "cost of living increases" as being inevitable. Why should that be? The reason for it is the inflation of our currency. We have only to look back in time at prices in years past to see the results. Just think of when a loaf of bread cost fifteen cents and a new car a few hundred.
Of course, income was much less then also, but inflation results in a loss in buying power along the way, and is detrimental to people on fixed incomes and the retired. If you are saving now for your retirement years, consider, at the present rate of rising prices, what will that money buy then.
Inflation is a hidden tax that we pay daily. And, run-away inflation is the hallmark of a collapsed economy.