"The Hidden Agenda: How Governments
Use Inflation To Redistribute Wealth"
by Nick Giambruno
"Inflation is the single biggest threat to your financial well-being. That’s not exactly a revelation for most people. However, propaganda muddles the issue, so there is a lot of confusion. Though he was wrong on just about everything, John Maynard Keynes was on target when he said: "Lenin was certainly right, there is no subtler, no surer means of overturning the basis of existing society than to debauch the currency. This process engages all the hidden forces of economic law on the side of destruction, and does it in a manner not one man in a million is able to diagnose."
What is inflation? How is it measured? What is coming next, and what can the average person do about it? I’ll break it down and clarify these fundamental and crucial questions.
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. However, the government and their court economists in academia and the mainstream media have redefined inflation over the years.
Since its founding in 1828, Webster’s Dictionary had defined inflation as "an increase in the money supply." Then in 2003, it changed the definition to "a rise in the general price level." The difference might seem subtle, but it’s not. It’s a deliberate deception. Redefining inflation this way confuses cause and effect, which is exactly why they did it.
Price increases are not inflation. Instead, they are an effect of inflation - an increase in the money supply. When inflation is redefined as "a rise in the general price level," many people are confused about what is happening and who is causing it. Inflation seems to come out of nowhere. 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 money supply to generate more money than they could through direct taxation and issuing debt. In short, inflation is a hidden tax the government takes from its citizens without their consent.
The Real Way To Measure 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)
The former is prone to political manipulation and consistently understates reality. The latter 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). The CPI measures changes in the price level of a weighted average basket of consumer goods and services. However, there are several significant flaws with the CPI.
First, it assumes that "a rise in the general price level" can be distilled to a single number. However, prices do not increase uniformly across the board, as seen with big-ticket items like medical care, college tuition, and housing, which tend to rise much more rapidly than other things.
As shown in the chart above, it is evident that price increases are unevenly distributed and cannot be condensed into a single number. The rise in prices is an unevenly distributed vector, with prices of scarce goods and services rising faster. Moreover, every individual has their own preferences, meaning their desired basket of goods and services will differ. For example, someone in Los Angeles will have a different basket than someone in rural Montana.
Trying to quantify a general increase in prices as a single number for over 334 million people - as the CPI claims to do - is an impractical task. It’s even more ridiculous than using a national average weather temperature to indicate what clothes you should wear for the day.
Second, the government gets to determine what items are included in the CPI and their weightings in the index. They can cherry-pick the items to show the least possible price increases. It’s like letting students grade their own papers. In short, the CPI is a worthless statistic. It’s misleading government propaganda intended to conceal the government’s hidden inflation tax.
Yet, most people incorrectly equate inflation to the CPI because government officials, the mainstream media, and academics repeat this falsehood, and most people thoughtlessly accept it as gospel. The real way to calculate inflation is intuitive and uncomplicated.
You don’t need to perform complex math calculations or have an advanced degree in economics - anyone can do it. All you need to do is look at the change in the money supply. Doing so eliminates much of the noise, political manipulation, and propaganda of the CPI to get a clear picture of what is occurring.
It is no surprise that the government prefers people to focus on a nebulous statistic like the CPI rather than the change in the money supply. That’s because when you look at the change in the money supply, it becomes clear that the government is engaging in a staggering amount of currency debasement. In short, the Federal Reserve has recently created more money out of thin air than at any other point in US history. Since 2020, the US money supply has skyrocketed by 36%, an incredible change in such a short period.
If your after-tax wealth has not increased by 36% since 2020, then you are not keeping up with the Fed’s monetary debasement. You are losing ground and on the road to serfdom. It’s just an anecdote, but I don’t know anyone whose after-tax wealth has grown by 36% since 2020. I imagine that most people don’t know anyone, either.
As bad as the situation with inflation is right now, it’s nothing compared to what is ahead of us. The coming money printing could be unlike anything we’ve ever seen before. Unfortunately, there’s little any individual can practically do to change the course of these trends in motion. The best you can and should do is to stay informed so that you can protect yourself in the best way possible."
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