Inflation is the result of Socialist policies

With each passing year, the purchasing power of our currency deteriorates... Economists sometimes speculate on what the cause of inflation might be, often when they speak they sound as though inflation is perhaps something intrinsic to money, that it is caused by something other than human actions. Of course, the source of inflation is that the quantity of money has increased, since we know that demand has remained roughly constant.

The price of money will fall (inflation) when it can be exchanged for fewer goods and this will be when it is more plentiful... Only a very small percentage of the money in circulation is in the form of notes and coins, the rest is nothing more than a Government commitment to issue extra currency. These promises are issued into the economy in the form of bank credit and Government obligations, the latter often in the form of Treasuries.

Either of these two "phantom" types of currency will be accepted by the State in the payment of taxes. They are also recognised by almost everyone in the economy as being equivalent to notes and coins and consequently trade at parity.

This extra currency is what causes inflation (a change in the price of money resulting from more supply). And this extra currency results from the Socialist actions of the State. Bank credit exists to compensate depositors if their money has been loaned by the bank and is no longer available for withdrawal... Those who lose out are people who are holding any other form of currency and it is their loss which allows the depositors to be protected.

So too is Government borrowing based on Socialist principles because again, those holding money lose purchasing power to the advantage of the State and anyone who is assisted by the State.



Purchasing Power of the British Pound Since 1694

It is not a phenomenon of nature (at least not outside our own actions) that results in the decreasing purchasing power of modern currencies. It is a consequence of the behaviours of those in authority.

It is a result of the intervention of the State that produces inflation.


18th January 2009