What Are the Real Causes of Inflation?
Executive Summary
- Inflation is normally laid by private banking interests and mainstream economists at the foot of the government.
- It turns out private banking interests are greatly to blame for inflation.
Introduction
A major point of deflection by mainstream economists and their funders and supporters, the private banking interests are the cause of inflation. They like to propose that private central banks are the only thing that stops inflation. Or that the gold standard is the only thing that stops inflation. This makes it appear as if private banking interests have the key to stopping inflation.
They do not.
How Private Banking Interests Continually Put the Blame on Governments for Any and All Inflation
Most of what private banking interests have to say about inflation is about gaslighting the audience as the real causes of inflation and the role of private banking interests in promoting inflation.
Entirely left out of their explanations is the role of banks creating money and dropping their lending standards for short-term profits.
This happens in every economic bubble.
How Private Banking Drives Inflation With Lowered Loan Standards
Furthermore, private banking interests have a direct financial conflict of interest in stopping inflation because they make so much money on fees for dropping lending standards. As in the 2008 subprime lending crisis, private banking interests know they can make low standard loans with impunity, as the government will bail them out. All private banking interests have to do is claim that the bailouts are “necessary for the financial stability of the system.” This is after they actively destabilized the system.
Governments Printing Money?
Economists and private banking interests continually talk about “governments printing money” when governments have handed over their central banks to private banking interests.
Nearly all money in all countries is brought into existence (or “printed”) by either private central banks or private banks. (Discussing the physical printing of money is of so little consequence it is a distraction to spend time on this topic as almost all money is digital and kept as a digital record.)
Governments don’t have much to do with it. However, when private central banks create inflation, mainstream economists again blame governments, even though they know that the governments do not control these central banks. Governments can set loan standards, but at this point, after so many years of private banking lobbying, lending standards have been greatly eroded, in the US at least, to the point where they are generally whatever the private banks want to do. Private banking interests demand 100% independent private central banks with no government oversight and want to maintain the right to point the finger at governments for causing inflation.
Who Lobbies Against Safeguards?
Repeatedly, it is private banks that argue against safeguards on the financial system. Somehow the presentation is that governments are irresponsible, but somehow private banking interests are responsible. The vast majority of money is brought into existence by banks creating loans. That is what sets the supply of money in a system.
This is explained in the following quotation.
“Contrary to popular belief, creeping inflation is not caused by the government irresponsibility in printing dollars. It is caused by banks expanding the money supply with loans.”
Source: The Web of Debt
https://www.amazon.com/Web-Debt-Shocking-Truth-System/dp/0983330859
The private banking system, which combines a private central bank with individual banks, creates a built-in system to create inflation. Since the Fed has been at the wheel, the US dollar has lost 97% of its value — since 1913.
If a private central bank and private bank system is so good at fighting inflation, and the Fed has been in control this entire time, why has the US dollar continued to devalue? Furthermore, why was the fastest devaluation during this time, right after the Fed was created?
This same point is observed by Paul Volker, the previous Chairman of the Fed, in the following quotation.
“It is a sobering fact that the prominence of central banks in this century has coincided with a general tendency towards more inflation, not less. [I]f the overriding objective is price stability, we did better with the nineteenth-century gold standard and passive central banks, with currency boards, or even with ‘free banking.’ The truly unique power of a central bank, after all, is the power to create money, and ultimately the power to create is the power to destroy.”
Source: Paul Volcker / AZ Quotes.
Several of the biggest hyperinflation events in Weimar Germany and Zimbabwe were in part due to greatly reduced productive capacity.