The Truth About How Governments Will Use Inflation To Redistribute Wealth

The Truth About How Governments Will Use Inflation To Redistribute Wealth. By Nick Giambruno.

Inflation is one of the most misused words in the English language. The original and correct meaning of inflation is an increase in the money supply.

Over the years, the government and their court economists in academia and media have attempted to redefine inflation to mean an increase in prices.

Since its founding in 1828, Webster’s Dictionary had always defined inflation as an increase in the money supply. Then in 2003, it changed the definition to mean a rise in the general price level.

The difference might seem subtle, but it’s not. It’s a deliberate deception.

Defining inflation as a rise in prices gives people the impression that inflation is a natural market phenomenon when it is not. It also conceals who is causing this unnatural occurrence to happen. The direct victims of this swindle are, therefore, confused about what is happening. It would be like redefining robbery to mean “a mysterious property loss,” as if there was no robber.

The reality is that inflation is 100% a political phenomenon. Neither the local grocery store, the pharmacy, the restaurant owner, nor foreign scapegoats are responsible for inflation. The government — with its monopoly control over the currency — is. …

Governments inflate the currency to generate more money than they otherwise could through direct taxation and issuing debt. Inflation is an indirect, hidden, and insidious tax that the government takes from the populous without its consent.

Doug Casey puts it best: “If taxation is the expropriation of wealth by force, then inflation is its expropriation by fraud.” …

Measuring inflation:

There are two main ways to measure inflation:

  1. based on the government’s definition of inflation (increase in the general price level)
  2. based on the correct definition of inflation (increase in the money supply)

One is faulty, prone to political manipulation, consistently understates reality, and is meaningless. The other more or less gives an accurate picture.

When you hear about inflation in the mainstream media, academia, or from some government official, they are talking about the Consumer Price Index (CPI) or some variation of it. The CPI measures changes in the price level of a weighted average basket of consumer goods and services. There are several fatal flaws with the CPI. …

It assumes the government’s definition of inflation can be distilled down to a single number. But prices don’t rise in uniform. For example, the costs of big-ticket items—like medical care, college tuition, and housing—tend to increase much faster than other things … Scarce and desirable assets and services are more prone to increasing prices. Further, every individual has their own preferences, which means nobody will have the same basket of goods and services they desire …

Who gets to decide what items are included in the CPI and their weightings in the index? The government, of course! Is it any surprise that they cherry-pick the items and their weightings in the CPI to show there is little to no inflation? … It’s like letting students grade their own papers.

Are rising beef prices causing the CPI to rise too quickly? Well, we can substitute soy burgers — or some other cheap industrial sludge — for beef in the index.

Or we can increase the weighting of things like Netflix and cell phones, which are decreasing in price, and reduce the weight of housing, which is rising, to show a lower overall CPI number.

Are gas and energy prices going up too quickly? Simple. We’ll remove them from the index. …

Yet, most people incorrectly equate inflation to the CPI. It’s a trope that authority figures repeat regularly, and most people accept it as truth without a second thought. …

The real way to calculate inflation is intuitive and straightforward. … Simply looking at the change in the money supply gives you a much more accurate measure than the CPI. It strips out a lot of the noise, political manipulation, and propaganda to provide a straightforward number to describe what is happening. …

From the start of the Covid hysteria in March 2020 until today, the Federal Reserve has printed more money than it has for the entire existence of the US. It’s the biggest monetary explosion that has ever occurred in the US.

True money supply, covid splurge

During that period, the US money supply increased by a whopping 41%. In other words, if your after-tax wealth did not grow more than the 41% hurdle rate since March 2020, then you are losing ground.

Some people did really well out of the splurge. Asset prices boomed, so those well-connected individuals who had access to the new money first, and bought assets, made out really well.

The psychology of inflation is often more important than the measure of inflation. It changes people’s behavior if they think there will be more inflation. Hyperinflation breaks out in the week that everybody realizes they need to spend their money as fast as possible because it is losing value (as several Latin American countries can testify).