2.9 Financing Debt With Inflation
Before 1971, even though the United States ended up cheating, it and other governments were theoretically constrained by the limitation of only being able to spend what they were able to earn or borrow, which is often subject to the bounds of Reality and good judgment.
Source: https://fred.stlouisfed.org/graph/?g=JUBy#
After 1971, suddenly the government realized that it no longer needed match its spending to any external reality, other than the ongoing belief by citizens and the world in its currency and eventual ability to repay.
However there is a strange secret emerging - the United States will never be able to repay, and its youth, who did not consent to their future being sold out by a corrupt and collusive government, are unlikely to relish spending their lives under generations of debt slavery as education, healthcare, infrastructure, and quality of life crumble.
When a declining empire saddles itself with debt, and doesn't have any money to repay, it has a few options.
The two "real" options, that result in creditors being repaid with money "of the same weight and fineness" are:
- It can try to take money from its citizens by increasing taxation
- It can try to take resources from other countries through war
What usually happens at the end of an empire, however, is that the government simply changes what "money" means, and begins "watering it down".
When money was money, this meant putting less gold into the coins, in order to inflate the number of coins a government could circulate.
In our modern era of floating fiat currencies, it simply means arbitrarily printing and loaning more money.
Inflation is not primarily a function of the prices of the underlying assets. It is primarily a function of the intentional devaluation of the worth of money, by the intentional inflation of the monetary supply.
The reason that prices go up is that the underlying amount of real goods to be purchased, such as gold, are now being "chased" by a far larger amount of dollars printed by the government.
Inflation is still a tax. It is just a secret tax that primarily hurts the poor, the working class, and retirees, while making the rich richer.
The horrendous spiral, which is an almost a laughable fraud where it not about to inflict so much suffering on humanity, is that a government can end up financing its own debt spiral with fake printed money, or inflation.
Forward to 2.10 The Banks Multiply the Fake Money, Turning It Into More Fake Money
Back to 2.8 A Last Gasp For the Bull Run
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