Inflation

Here's the thing, if I could count, I would not have gone to law school. No, seriously, I'm pretty good at basic math, but my quest to understand economics sometimes hurts my brain. I have published a few posts about inflation, in an attempt to help me understand it better.

Honestly, I think that I'm making it too hard. On the FEE website this morning they published "A Letter to a Ten-Year-Old." I guess that a ten-year-old wrote a letter to the Foundation for Economic Education asking what inflation was. This response was drafted by Beth Hoffman in 1981. This was a great article, very short, and the most important thing I learned from the article was that my understanding of economics is approximately at a ten-year-old level.

In the letter, Ms. Hoffman refers to another article, "Inflation In One Page", written by Henry Hazlitt. Again, a simple one page explanation. This is economics that even I can understand.

Inflation

There is a must read article on the FEE site today explaining the cause and effects of inflation. It is a another new article published by Lawrence Reed. I love the first line. “Government,” observed the renowned Austrian economist Ludwig von Mises, “is the only institution that can take a valuable commodity like paper, and make it worthless by applying ink.”

You rarely hear somebody explaining this stuff. Honestly, for most of my life I assumed that rising prices were the cause of inflation. Like the article says, that is like assuming that wet sidewalks cause rain. I heard on the news this morning that the inflation rate in Zimbabwe is over 230 Million percent. Ouch!

Of course governments cause inflation, they are the only ones that can. They can't get their spending under control, but they don't want to raise our taxes anymore because we won't vote for them if they do. So, instead, they just print more money. The price of everything goes up, the value of our dollar goes down, and none of us even suspect that our own government is the one stealthily picking our pockets. Brilliant! I'm the dummy that thought that taxes were the only way for the government to mug me. Silly me.

Is anyone out there scratching their head, and wondering where the money for the $750 Billion bailout came from? Maybe Uncle Sam had that cash sitting in a savings account somewhere.