Inflation and socialism are almost always at work together because socialism is non-sustainable by itself and therefore leads a government to inflate the currency to support its growing financial burden on the economy.
By definition, inflation is the increase in the supply of a currency. Higher prices are the results of inflation that has already taken place. So increasing prices are the results of inflation that may have been introduced into the economy years ago.
The US government has been inflating the dollar for decades and in the last year has increased the inflation of the dollar by trillions of dollars, primarily because we have elected a very social President and congress. The primary tool of choice to inflate the currency has been low interest rates by the Federal Reserve.
The Captivating Idea of Socialism
The socialist captivate the attention of the public by blaming capitalism for poverty and claiming that they will push even harder to give more money to the poor. They tell the public that they are victims of capitalism and that it’s not fair that the rich have all the money while the poor are getting poorer. They clamor to tax the rich and increase the handouts, with free houses, free cars and zero interest rates.
The Damage of Inflation and Socialism
The only problem is that socialism never delivers what it promises and the poor only get poorer yet. In fact the reason that the poor are getting poorer is because of all the socialism and inflation that is already in the economy.
Inflation confiscated the saving of the poor while increasing prices of goods and services, making the poor even poorer. Socialism increases the taxes on everyone that has a job and reduces the number of jobs available for the poor, again making the poor even poorer.
Socialism does give money to the poor, but the money given to the poor only works against them by trapping them in poverty as they become more and more dependent on government handouts. The money given to the poor is given to them without any financial education and therefore they are soon broke again. Without improving their financial education they cannot escape the cycle of poverty.
The reason for that is because the politicians want the public to continue spending to keep the economy going so they can continue offering entitlement programs and getting reelected. A financial education would lead to a recession, as millions would start saving more of their money and the politicians would be forced to cut back on their spending.
The Prosperity of Capitalism
Capitalism is the only system that gives the poor the opportunity to get a real job, work hard and live an abundant life. The jobs that capitalism provides (non-government jobs) are essential for a number of reasons.
They teach people to respect the money they earn and not to waste it but to save it. A real job also provides a sense of accomplishment that gives people the appreciation that they need to enable them to spend their hard earned money on their families.
The process of working hard to produce something useful, allows most people to live a conformable yet satisfying life. In this system of hard work and savings, wealth is produced and reinvested to allow a few to become rich.
This is the part that socialist don’t like. They don’t like anyone getting rich, while some are still poor. But the poor depend on the rich for the opportunity to escape poverty. Without the rich no one can create real jobs and no one can escape poverty.
The government can create temporary jobs but they do not provide the same benefits to the economy. Government jobs are created by taking wealth away from everyone, primarily the rich, but once that money is gone they resort to printing money (inflation). But inflation is a short lived strategy because it leads the entire economy into a declining wealth cycle that is difficult to break.
When a government has enough support to create massive inflation without the votes to stop them, the people are too confused to realize the damage that inflation is causing. This is what we have today. Some years later when prices drasticly increase, it will become obvious that inflation was a bad idea and the public will begin to turn on inflation and the policies of it’s evil twin socialism.
The Public Is Still Confused
Today the public is still too confused to understand the damage that inflation will cause and it may take a few more years before they realize how much damage has been done by the current policy of inflation. When they do, capitalism will once again gain support as the evidence of higher prices will show that socialism and inflation are not the answer. The economists will return to reason as socialism and inflation are again proven to be failed policies.
The poor will always be with us (Matthew 26:11) and socialism and inflation are never the answer. The sooner the public realize how damaging the current policies of socialism and inflation are, the sooner the nation will be able to start rebuilding. But until they do we continue to dig a deeper hole and of course the longer that socialism is publicly supported the greater the risk of a tyrannical government takeover.
This week I participated in several blog carnivals
They did an excellent job and as usual, there are tons of great articles. If you have the time, I highly suggest you skim through this week’s carnivals.
Carnival of Personal Finance - History of College Football Edition
Money Hacks Carnival #79 - Hack The Planet Edition