Inflation Series – Inflation Redistributes Wealth.

Inflation: Artificial expansion of the money supply.

When the money supply is artificially increased it has to be initiated by some entity; some legally-sanctioned or some illegal counterfeiting agency. If we assume it is an illegal counterfeiter then the first possessors of this new money have new wealth in terms of the goods and services received in exchange for pieces of paper not worth what they claim. The goods and services extracted decrease the wealth of the providers of goods and services because they get nothing in return. Wealth is redistributed towards the counterfeiters.

The same thing happens when the legally-sanctioned counterfeiters expand the money supply. Those who have first access to the new money gain wealth at the expense of those who receive it later on, after prices have adjusted upwards. This is the real reason why those in control of the money supply expand the money supply – they redistribute wealth towards themselves and those who are favored.

The well-known saying “The rich get richer and the poor get poorer.” is the direct and indirect consequence of the artificial expansion of the money supply. Instead of believing the statist diatribe that individual selfishness is the cause of the widening gap between rich and poor, you now are better able to see that it is inflation which being used purposefully to redistribute wealth and which is the primary cause of the extremes of wealth and poverty.

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