Thursday, October 18, 2007

Dying of Money

This is something I wanted to post ahead of tomorrow's "Features of the week" update. If you're interested in understanding the true nature of inflation and how it originates, read on.

Over the past few weeks, Jim Puplava and the rest of the Financial Sense Newshour team have devoted an hour long segment of their program to a discussion of the causes and effects of inflation.

In a multi-part program segment called "Dying of Money" (a nod to the Jens O. Parsson book of the same title), Jim and his co-host, John Loeffler, take a look at the current global inflation and try to put things into perspective by examining the historical patterns of past inflationary eras.

What is the cause of inflation? Throughout history, we've seen that inflation has been brought about as a result of undisciplined money creation. No matter what excuse or rationalization lies behind the running of the money printing press, experience shows us that the results are almost always the same.

A surplus of money and credit leads to rising prices in commodities, goods and services, and assets. Wealth and savings are transferred or lost as a result of the inflation, and in some instances we see unrest and upheaval in the society. Some inflations have even coincided with an ensuing decline of the host nation, empire, or civilization.

But I will let host Jim Puplava sum it up for you:

Most people, John, I think, understand inflation as rising prices. In other words, they understand it from the perspective of its symptoms – which is rising prices – versus its cause which is the expansion of money. And if you go back throughout history, going back to the days that money was created as a medium of change, once we invented money as a way to conduct commerce, the next consequence of that was inflation. That was the very next thing that came after money as you try to create more of it above what was created through commerce or through productive hard work. Essentially, what you need to understand is inflation is a disease of money.

To better understand inflation, and why Puplava and friends are discussing potential outcomes for our economic future, please see the audio broadcasts and transcripts of the "Dying of Money" program series.

Click here for Part one, Part two, Part three, and Part four.