Inflation Is Theft

If you follow economic news to any degree, you’ve probably heard of quantitative easing, in which a central bank like the Federal Reserve buys up securities like stocks and bonds with money that they create out of thin air. This, naturally, causes inflation by expanding the money supply and the latest round has been going on since the Big ‘Rona in 2020, when the Fed started using it to print money with the aim of stimulating the economy. While economists warn of the dangerous consequences of QE, like permanently higher prices, asset bubbles, and hyperinflation in the worst case, I haven’t heard anyone talking about the moral ramifications of money printing. Since I already gave away where I stand in the title, let me explain why quantitative easing, debt monetization, and other inflationary policies are a form of theft.

We need to start by understanding just what makes something, like gold, dollars, or Bitcoin, money. Money is quite simply a medium of exchange that allows people to trade goods and services by using the money as a representation of the value they have contributed to the economy. When you do work for pay, the work you do contributes to the economy by creating goods or services, and in exchange you are given the right to extract the same amount of value from the system by spending the money you earned. In the past, this wasn’t always the case, and the value would be given back in the form of a share of what you produced.

For example, a serf would work his lord’s land while living on it as a tenant, and in exchange he got to keep a portion of the crops. He contributed value by growing crops, and he got value back in the form of food and a place to live. This wasn’t a particularly great economic arrangement, since you can only trade crops for goods and services if the providers of those goods and services want the specific crops you’re trading. This limited the economic activities that both the lord and the serf could engage in to only those they could barter for with crops, labor, or land, if they didn’t have money. This type of system is horrifically inefficient at any sort of scale, which is why human societies throughout time and across the world have always had some form of money.

Money allows you to contribute value to the economy where it is useful to others, for example, in graphic design, automotive repair, or talk radio, and extract an equal amount of value in the form that is useful for you, such as food, housing, or entertainment. Furthermore, it allows you to delay that consumption by saving your money, which allows the economy to use the resources that you are entitled to, thus helping it to grow faster and giving you more and better stuff to spend your money on later. Thus, money communicates your right to a share of the goods and services produced by the economy, which you earned by first contributing value to the economy, thus helping other members of society. This is in line with what Paul says in 2 Thessalonians 3:10-12:

For even when we were with you, we used to give you this order: if anyone is not willing to work, then he is not to eat, either. For we hear that some among you are leading an undisciplined life, doing no work at all, but acting like busybodies. Now we command and exhort such persons in the Lord Jesus Christ to work peacefully and eat their own bread.

To sum up what he’s saying here, God wants you to produce, before you consume. This is how He meant for the economy to work, and He designed the world and the people in it to work this way. In a just monetary system, you only get to claim resources after you have contributed resources, and your right to do so is symbolized by money.

For this to work, however, the money has to retain the value it symbolizes, otherwise you end up with a situation where you contributed value, but you can claim less than you put in. This is what happens during inflation; the value that you contributed remains constant, or even increases due to technological advancements, but the amount of value that you can claim continues to diminish as new money is pumped into the system. This is because the value of the money supply must equal the value of the goods and services in the economy, since money is just a symbolic representation of that value. Thus, when new dollars (or any other fiat currency) are printed they take value from all of the existing dollars in the system so that the supply of money equals the total value of the economy.

In this way, a central bank colludes with the government to steal the value of the money already held by participants in the economy, by giving themselves more money without contributing value. What they have done, in essence, is forge a claim to goods and services produced by others, by creating new claims on resources, in the form of money, out of thin air. This allows them to take value out of the economy, in the form of goods and services purchased with money that they didn’t earn. In other words, central banks and governments steal from everyone when they give themselves free money.

This is, of course, not okay. The question is what can be done about it. After all, the temptation for the Fed to print money is going to be there as long as they have the ability. The same goes for any institution that has sole control over the money supply, they will be tempted to make more and will inevitably cave to the temptation.

The solution to this problem is to have money with a limited supply that is independent of a central institution; like gold or Bitcoin. When the size of the money supply is kept out of the hands of central banks and governments, it prevents them from colluding to steal through inflation, because they can’t simply make more money out of thin air. By preventing this kind of theft, it ensures a more just and prosperous system for all involved.

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