Page 24 - PowerPoint Presentation

> Inflation – the most sinister tax of all

Conclusion

Let us assume that money supply does actually stimulate job creation and brings the
demand curve back to a higher rate of output and to higher prices. The effect is only the

trade-off for well-being.

Here we should ask ourselves, where did this all start?

Why did we experience short run economic fluctuations in the first place?

Overall short term fluctuations are blamed on natural disasters. A sudden shortage of
commodities causes prices to climb. Increased cost of production decreases output and

causes recessions and unemployment.

If we let the economy adjust and let the efficient market forces play out, we probably
would experience much milder short term distortions. If there is no inflation and Central

Bank intervention in market forces, the economy would not experience artificial booms.

Maybe?

• All short-term fluctuations are caused by government’s money printing practices called

Inflation.

• Inflation is used to extend cheap credit to the public to artificially pump up “soft”

economies. Money expansion increases GDP – a modern measure of well-being.

• Inflation and the Central Banking System causes all of the inefficiencies described above,

bubbles and bursts.

• Interest rate manipulation from central banks gives markets false incentives and sends

resources to the wrong locations.

• By bond auctions, fiat currencies and the fractional reserve banking system,

governments can “stimulate” the economy by adding more debt to it.

• All recessions we experienced in the 20th century were sparked by uncontrolled,
extended and easy access to cheap credit created by INFLATION!

• Government programmes, such as providing guaranteed mortgages to an already
insolvent public give a free ride to speculation in the property market.

• Artificially low interest rates, as a central bank solution to the dot.com bubble crisis

sparked an overheating process in property.

Guess what is the solution to similar problems today? In many, if not most, cases; print

more money and keep spending…