John Maynard Keynes from “The Economic Consequences of the Peace”, 1919; “There is no subtler, no surer means of overturning the existing basis of society than to debauch the currency. The process engages all the hidden forces of economic law on the side off destruction, and does it in a manner which not one man in a million is able to diagnose.”
The above quote says it is difficult to understand what happens when government prints money {debases the currency}. So difficult in fact that if you and I understand what happens, there are over 2 million people who don’t understand it. In this article titled Understanding The Federal Reserve’s Shell Game, at mises.org, Dan Sanchez does a great job explaining the abstract economic concept of what happens when The Fed electronically prints counterfeit money.
Here are some excerpts from the article.
‘The Federal Reserve is a key component of the American Transfer State. Under the guise of “macroeconomic management,” it redistributes vast amounts of wealth on an ongoing basis through inflation. The victims of these transfers are ordinary Americans. The beneficiaries are the government and its elite cronies.”
“The true wealth of society — what actually sustains human life and makes it more comfortable and delightful — is the stuff we buy with money; not money itself. It’s the food, clothing, housing, smartphones, mountain bikes, and other consumers’ goods. It’s also the farmland, factories, robots, raw materials, labor and other producers’ goods used to make those consumers’ goods.”
“Creating new money does not create any additional stuff to go around.”
“The new money reaches some people early and some people late. By the time the new money reaches the late receivers, bidding up their selling prices, it has already bid up the prices of the things they buy to an even greater extent. So the late receivers get poorer, while the early receivers get richer.”
“And the earliest receivers always include the government and its partners, while the late receivers are usually workers and small business owners who don’t have such lofty connections. So these “commoners” are effectively taxed for the benefit of the government-connected elite. But, since the taxation was effected through inflation, the public doesn’t realize that.”
“Instead of obnoxiously demanding that the public hand over its wealth, the government just quietly siphons it away. This way it avoids public outrage and resistance, and so is able to maximize the loot. As Jean Baptiste Colbert (finance minister to King Louis XIV of France) put it, “The art of taxation consists in so plucking the goose as to get the most feathers with the least hissing.” With inflation, the geese hardly hiss, because they think they are simply molting, and are unaware they are even being plucked.”
Read the whole article it walks you through how the money laundering happens.
In the article it talks about a general inflation as the money leaks out into the whole economy. But as we saw in the housing boom and bust in the early 2000s, and as we now see in the current financial bubble, the printed money can be pushed into particular sectors of the economy. But the result is the same. The first receiveea benefit at the expense of the people farther down the food chain.
At some point people have to be made to understand that they are getting fleeced by the Federal Reserve’s monetary policy. We have to educate people one person at a time because as Keynes said, “…it’s done in a manner that not one in a million is able to diagnose.” Elite politicians, bureaucrats, and our educators won’t educate people because they benefit from the money printing. It has to come from the bottom up. Spread the word.
In another article titled The Long History of Government Meddling In The American Marketplace, at mises.org, Mike Holly shows that money printing isn’t a new thing, the Federal Reserve started counterfeiting money almost as soon as it came into existence in 1913.
Here are some articles to help understand Fed money printing.
Related Article –A Tornado vs. The Fed: Which Is More Destructive, at austrianaddict.com.
Related Article – Thomas Woods Explains The Austrian Business Cycle Theory, at austrianaddict.com.
Related Article – Federal Reserve Policies Cause Booms And Busts, at austrianaddict.com.
AUSTRIAN ECONOMICS ADDICT 