OUT OF THIN AIR

by Ron Paul

When I talk to many teenagers and grade schoolers, they seem to have no problem comprehending the fact that if you just create a lot of money, it’ll be like Monopoly money and it won’t have value. Governments do that for all kinds of reasons, especially to enhance political power to fight wars we shouldn’t be fighting or to pass welfare programs that aren’t deserved.

When you print that money, the value of that dollar has to go down, and then one of the consequences of inflating the money will be higher prices. But there are a lot of other problems, too, with inflating. It causes a business cycle, it causes financial bubbles and it causes a lot of economic distortions and unemployment. But in a nutshell, inflation is very simple. When governments create new money out of thin air, you have inflation.

Inflation is immoral because it’s theft. Think about it this way: If you or I had a printing press and we could print the money just like the government does, we would be arrested and put in jail for a long, long time because we’d have stolen value — we’re pretending these pieces of paper are worth something. The Founders understood this very clearly, and that’s why they said in the Constitution that you can’t emit mills of credit, which is paper money, because they knew what runaway inflation is like.

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