What Inflation Is and Isnt

Jinco Inc.
Newsletter
How the Government Has Been Confiscating Your Wealth Through Inflation which will keep the majority of the public content. This creates a dangerous naivety about what is really happening to the value of our currency, the U.S. dollar. Inflation means expansion, and in economics it refers to the expansion of the money supply. This added money supply can come in the form of new printed money or an increase in available credit. When this 'new money' is added to the existing supply, the general level of prices will rise, assuming the amount of goods and services within the system remains unchanged. To understand why this happens is simple. Any kid who has ever collected baseball cards will tell you that the more a particular card is in circulation, the less it is worth. To deal with our most recent economic crisis, The Federal Reserve under the Presidency of Obama used monetary expansion, inflation, to try and stimulate our economy under QE1, QE2 and various other stimulus programs. As we are now seeing today, these policies have done more harm then good. It resulted in an 'artificial' increase in aggregate demand for goods and services. The demand is artificial because it did not result from increased productivity, but from inflation. In a basic barter economy demand is determined by how much of a product can first be produced. For example, a watchmaker's demand is determined by how many watches he can produce. The more watches he produces, the greater his ability to exchange them for other products. Demand is created by the watches the watchmaker actually produces, for without them he has nothing to barter

Justin Jinorio

Before we get to the meat and potatoes of what inflation really is and how its manipulation has been confiscating your hard earned wealth and/or purchasing power, we must first realize that the official inflation numbers given to us, the consumer price index (CPI) and producer price index (PPI), are decoys designed to distract you from what is really happening with inflation. Notice I did not use the term money, but wealth and purchasing power instead. The reason being is that true wealth does not come in the form of a piece of paper representing a dollar amount, its form is in the products and services we create and surround ourselves with in order to better our standard of life. Without these luxuries there would be no need for money, for money is just a representation of the wealth that we produce. The real value resides in these products and the demand for them, not in the paper that we use as a bartering mechanism. At best the CPI and PPI, by tracking prices, measure the effects of inflation and not inflation itself. Since inflation can exist before its true effects are experienced, the government, which relies on inflation to advance its agenda as I will explain shortly, can continue this invisible expansion of the money supply by the Federal Reserve and consequently diminishing the purchasing power of your wealth, without the real extent of inflation being officially recognized. The CPI and the PPI are engineered to represent a level of price inflation in

with and therefore has no demand for other products. Contrast that with an expansion of the money supply, inflation, which adds no real goods to the economy. Therefore, demand created by inflation is artificial and won't last long as no tangible goods are produced. The result is simply an increase in prices. More money pursuing the same amount of goods and which ultimately does not create an increase in real demand. This is why after three years of increasing our money supply to stimulate growth, all we have to show for it is an even higher unemployment rate, a 100% debt to GDP ratio, a dollar which has lost a substantial amount of its purchasing power and now a double dip recession that seems inevitable. Why do governments love inflation? Well if you think about it, it is a way for them to take money from the people without the people even realizing it. When the Fed expands the supply of money causing inflation, it diminishes your purchasing power which is literally confiscating your wealth. It is almost like a hidden tax and this is how it is used. 1. Inflation makes the national debt more manageable because it can be repaid with cheaper dollars.....Your Dollars!!! They may have just as well raised your taxes, for when the money supply is increased your paying for it anyway. 2. Inflation finances social programs that voters demand but don't want to pay for with higher taxes. Wake up people!!! Your paying for it anyway every time the Federal Reserve increases the money supply. 3.Inflationary spending is confused with economic growth, which is confused with economic health. Just because more dollars are being moved around does not mean real wealth has been created. Remember, the true value of wealth is in the products and services we create, not on a piece of paper distributed by the Federal Reserve. 4. Inflation causes asset prices to rise such as stocks and real estate, tricking voters into believing

in the illusion of wealth creation even as the real purchasing power of their assets fall. The government portrays to us the false message that inflation is merely an acceptable tradeoff for economic growth, but the reality is that true economic growth causes consumer prices to fall, as increased productive output raises the supply of goods relative to the supply of money, if that supply were stable. This supply was once stable at a time when the U.S. backed their paper money with a supply of gold. In those days U.S. money could be exchanged for its equal value in gold. Once we disbanded the gold standard government has been able to control the money supply and use inflation to its advantage while diminishing our wealth at the same time. The Federal Reserve needs to be controlled. Its members are not held accountable because they don't have to worry about losing an election. It is imperative that we raise awareness of this issue and make amends before it is too late. America is on the brink of disaster there seems to be no sense of urgency among the general population. Re-post this note if you care about your country. The time to act is now.