Capitalism and the Miracle of Inflation

   Posted by: chris   in Fish Talk

Or!!!How inflation saved capitalism!

The basic tenet of capitalism is that a person or entity has the right to as much wealth as they can legitimately gather, however as legitimacy is decided by law and law is written by power and power is the domain of wealth then the legitimacy quotient of the tenet as much wealth as one can “legitimately” gather is non applicable.

If it is not patiently obvious to you that laws are written from the perspective of wealth and designed to control the poor then perhaps you need to reexamine your perspective of the justice system.

If absolute wealth is a principle and possibility of capitalism then absolute poverty must also be a principle and possibility.

If there are 10 slices in a pie and one person lays claim to 9 then the rest of the party goers must make do with sharing 1 slice. However people being people, there is sure to be the one person who wants most of this one slice for him/herself. In the end most of the party goers end up fighting over the crumbs that have fallen onto the floor.

This type of party invariably ends up with Marie Antoinette losing her head.

And if there is one thing the rich people hate more than poverty it is losing their heads. So a solution had to be found to the perplexing problem of poor people being unhappy with the ever decreasing supply of crumbs.

So as a stop gap measure to declining resources in Europe colonization was invented. This was a neat way of stealing the resources of other people who could be easily dominated, this increased the size of the pie for a time until the dominated colonial people had enough and cried stop.

A new way had to be found to enable some people to be incredibly wealthy and still keep their heads attached to their bodies and in the end the solution was simple, “inflation”.

Inflate the pie into infinity slices. Now while the Earths resources may be limited, the actual concept of money is limitless, after all there is infinity numbers and all money actually is, is numbers.

Long ago before investment bankers where sophisticated (cunning) money had a standard. This meant that to print money a reserve in gold or silver was needed. This little inconvenience severely restricted the available supply of money within an economy restricting the size of the pie.

Merely by removing the standard and not requiring a reserve of gold or silver to back up currency changed everything.

Now when there is a shortage of resources we merely print more money backed by nothing except a bond which is a piece of paper promising to repay. Once there is a bond to match it, money can be printed with abandon.

The one fault in this brilliant trick is that having so much money available tends to inflate prices. Houses that used to be worth $1000 are now selling for millions.

However without inflation which provides the “pie with infinity slices” capitalism would not be a possibility.

Long periods of unrestrained inflation are called “booms”.

History has shown that all, repeat all booms eventually “burst”.

In reality what happens is that inflation does not inflate all sectors of the economy equally and every once in a while a correction is required. This period of correction is called a recession and is usually the result of people who thought they had a crumb coming to terms with the stark reality of their pie-less situation.

Be Sociable, Share!

Tags: , , ,

This entry was posted on Wednesday, October 20th, 2010 at 12:54 pm and is filed under Fish Talk. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.

Leave a reply

Name (*)
Mail (will not be published) (*)