Inflation and the Moral Decay of Civilization

With consumer sentiment abysmally low, it’s tempting to think of inflation as an exclusively economic phenomenon. When its nature as society-wide fraud is understood, however, it’s easy to see why inflation corrodes both cultural and economic institutions.

The following article was originally published by the Mises Institute. The opinions expressed do not necessarily reflect those of Peter Schiff or SchiffGold.

Every major economic illusion begins with the corruption of a word. Inflation once meant popularly what it still means in truth—the artificial expansion of money and credit. But, over time, it has been redefined to describe its consequence rather than its cause. This deliberate inversion of language serves a political purpose: it shifts blame from those who create money to those who merely spend it, transforming an act of monetary fraud into a mere statistical “phenomenon.” The result is profound. By redefining inflation, governments have obscured its nature, economists have lost its meaning, and citizens have come to accept their gradual impoverishment as an unavoidable fact of life. The Austrian tradition—more than any other—seeks to restore that lost clarity: to call things by their proper names, and to remind us that inflation is not a symptom of capitalism’s failure, but of government’s assault on money itself.

Inflation, as understood by the Austrian School, is not a general rise in prices but an artificial expansion of the money supply. Everything else flows from that root cause. Prices do not rise uniformly, nor do they rise spontaneously. There are supply and demand reasons why prices can rise. However, prices largely rise at present because additional monetary units are injected into the economy, altering the structure of production and distorting economic calculation from the ground up.…