Inflation is not theft?
How about your salary getting lower and lower?
First off - this article was born out of frustration. I’m frustrated with intelligent people who seem to accept inflation as a force of nature, as something normal.
They don’t see it necessarily as something fair but they accept it as something annoying yet inevitable - like too many rainy days in a row, like a mild earthquake - what can you do about it? Prices are getting higher - what can you do about it? Nothing, right?
So if we define inflation as theft they dismiss it because inflation happens due to various economic forces…
Well, natural disasters, war and other black swan events can definitely cause inflation because they disrupt production and supply chains. That makes sense. I’m talking however about man-made inflation due to monetary policy. And when I bring it up they jump to defend the central bank and the government as “legitimate” and “official”. “Someone has to make the money.” they say.
Then I take them back to the old times when the economy was based on barter - no one could make a deer out of thin air - that was the most honest economy. No one had the ability to create value without work. Work always preceded value and consumption. Even when money came to be, work preceded the money itself - can you find a beautiful shell at will, without a lot of searching and without luck?
Nope. This doesn’t work either because, smart people as they are, they say that the barter economy was primitive and civilization grew when states issued money so everything became more efficient.
There is truth to that but it’s an incomplete truth and it leaves out a lot of nuances.
So, if inflation is defined as rising prices and a decrease in the purchasing power of money then another way to look at it (it would have the same effect) is to say that inflation means your salary is getting lower. Either way you look at it, you will afford less and less in each situation.
So now imagine your boss tells you this:
Dude, I’m going to have to lower your salary each month.
What?! You may say.
Yeah… That’s the way it is.
But how? Why?
Hey, listen. There’s something else. Me and the entire society and the government itself will guarantee something BIG to you: prices will be fixed forever. Even the price of assets.
Wow! That sounds like a good thing…
Yes…
So my salary will decrease with time but prices stay fixed?
Yes…
But I’ll have to work the same amount?
Yes, of course. That’s why I’m paying you…
Aha….
Really?
So in this new economic environment where prices are fixed forever you may be able to buy a home if you save enough in your first years of working. But then what?
How are you going to maintain that house warm - 6 years into your job when your salary has decreased to say… 50%? Then later, after 10 years, what are you going to eat when your salary is only at 10% ? And then, after a few extra years, when your salary will be 3%?
What good will it do to you if prices are forever fixed?
If you think about it deeply, you may not want to sign that work contract. Of course, because you’re smart. And you wouldn't give your consent for such a terrible idea.
But with classic inflation, when money is printed out of thin air by the central bank, YOU DON’T HAVE A SAY in it. No one asks for your consent. That’s why we say it’s theft. It’s subtle, it’s mischievous but it is REAL = you afford less and less because of it.
When your boss says he’ll lower your salary each month your intelligence gets offended. It seems unfair. How are you not offended when a different mechanism has the same effect on you? How is that mechanism fair?
Am I here to say to buy Bitcoin? Nope. Do your thing. Ignore Bitcoin.
I’d like you to question what is money. Who makes it? Why? How? What were the early forms of money?
Study the history of money. Think about the times before money existed - how value was created and exchanged? Is the current system fair? Were there other systems before which were more correct? Who creates more value: the man who works or the man who rules? Who has more skin in the game? Etc, etc.
Remember that money doesn’t come from God. It’s a human invention. Can we improve the way money works? Sure we can, like we’ve improved or replaced a lot of other things.
Think about it.
Peace!
Written by: youtube.com/@cesuntbanii, a bitcoiner from Romania 🫡