Inflation is Theft

[Front Matter and Publication Information]: The title page and publication details for 'Inflation is Theft', published by The Foundation for Economic Education in 1994. Includes ISBN, copyright notice, and location of the publisher. [Table of Contents]: A comprehensive table of contents for the volume, divided into sections on 'Immoral Politics' and 'Sapping the Foundation'. It lists essays by prominent free-market and Austrian school thinkers covering the moral, political, and economic consequences of inflation, including its effects on trust, employment, and interest rates. [Table of Contents (Continued) and Introduction by Hans F. Sennholz]: Hans F. Sennholz introduces the volume by defining inflation as a political evil perpetrated through the Federal Reserve's monetary monopoly. He traces the history of legal tender in the U.S., from the Continental Dollar to the 1933 revocation of the gold clause, arguing that such powers allow the government to expropriate wealth from creditors. He further discusses the transition to a pure paper 'fiat' standard in 1971 and the subsequent emergence of the global 'dollar standard.' [The Dollar Standard]: Sennholz analyzes the evolution of the international monetary system under the U.S. dollar, contrasting it with the stability of the gold standard. He details the economic turbulence of the 1970s and 1980s, including the Nixon shocks, the Carter-era inflation crisis, and the Reagan-era debt explosion. The segment concludes by discussing the European response via the Maastricht Treaty and predicting the eventual collapse of the welfare-transfer state and a return to the gold standard. [Inflationism as Political Policy]: J.H. Peters, drawing heavily on the work of Ludwig von Mises, argues that inflation is a form of indirect taxation used by governments to avoid the political cost of direct taxes. He critiques the fallacy that inflation can permanently advance public welfare and explains how it falsifies economic calculations. Peters emphasizes that the only remedy for inflation is stopping the arbitrary expansion of the money supply and warns against the destructive nature of price and wage controls. [The Moral Issue of Honest Money]: Gary North argues that money is a moral issue, not just a technical economic one. He defines 'honest money' as a social institution based on the fulfillment of contracts, specifically the promise of redeemability. North critiques the 'neutrality' of modern economics and asserts that the gold standard serves as an essential impersonal guardian against the arbitrary power of the state. He challenges Milton Friedman's efficiency arguments against gold, suggesting that the 'costs' of mining gold are a necessary brake on government expansion. [Built-In Pressures to Inflation]: Clarence B. Carson examines the structural obligations of the U.S. government that drive inflation, including the national debt, Social Security commitments, and mortgage guarantees. He argues that political pressures—such as the desire to spend without taxing and the demands of labor unions—make inflation a preferred tool for politicians. Carson proposes divesting the government of its power to manage the money supply, prohibiting the monetization of debt, and moving toward 100 percent reserve requirements. [The Rotting Fabric of Trust]: Donald L. Kemmerer discusses how inflation destroys the 'fabric of trust' necessary for a productive economy. Using an anecdote from India to illustrate the stagnation caused by a lack of trust in financial institutions, he argues that U.S. government-caused inflation is driving Americans to hoard non-productive assets like gold and gems, thereby reducing capital investment and lowering the standard of living. [Dishonest About Inflation]: Melvin D. Barger identifies dishonesty as the root cause of inflation, both in its creation and in the public's refusal to acknowledge its source. He critiques common scapegoats such as 'cost-push' factors, government regulations, and low productivity, arguing that these are effects or distractions rather than causes. Barger concludes that only a return to 'dependable dollars' and moral stamina can end the cycle of currency debasement. [Blaming the Victims: The Government’s Theory of Inflation]: Robert Higgs deconstructs the Carter administration's theories of inflation, specifically the 'administered-price' and 'cost-push' models. He argues that these theories are used to shift blame from the government to the private sector. Higgs asserts that inflation is a purely monetary phenomenon caused by the excessive growth of the money stock, facilitated by the Federal Reserve to finance federal deficits. He concludes that private actors cannot cause inflation because they do not control the aggregate volume of money expenditure. [Inflation: By-Product of Ideologies in Collision]: Wesley H. Hillendahl traces the ideological conflict between the free market and the controlled economy. He reviews the historical milestones of individual liberty—the Magna Carta, the Petition of Right, and the U.S. Bill of Rights—and the moral philosophy of Frederic Bastiat. Hillendahl contrasts the massive productivity gains of the American free enterprise system with the roots of collectivist thought, which seeks state control over the individual and the market. [The Legal Framework of the Welfare State]: Lists the specific economic and political measures used by collectivists to convert society, including the abolition of private property, progressive taxation, and government control of credit. It argues these features constitute the legal framework for the antithesis of the free market envisioned by the American founding fathers. [Ideologies in Collision: Marx vs. Bastiat]: Contrasts the ideologies of Karl Marx and Frederic Bastiat regarding the common man and tyranny. It argues that while Marx advocated for a new bureaucratic tyranny, Bastiat envisioned freedom through restrictive law. The section also cites F.A. Hayek to describe the 'mixed economy' as an unstable transition toward a command economy. [Inflation in the Transitional Period]: Examines inflation as a manifestation of the transition from a free market to a controlled economy. It argues that as the government expands and starves the private sector of funds through taxes and nonproductive overhead, monetary inflation must accelerate to accommodate credit requirements. [The Moral and Economic Failure of the Controlled Economy]: Argues that a bureaucratically controlled economy is incapable of sustaining production due to the absence of profit motives and personal incentives. It features Garet Garrett's warning on the moral decay caused by engineered inflation and uses Antony C. Sutton's research to argue that Soviet industrial capability was almost entirely dependent on Western technology transfers. [Socialism, Gold, and the Moral Solution]: Discusses how even socialist states like the USSR eventually had to rely on gold to stabilize currency. It concludes that the solution to inflation and the drift toward a command economy is primarily moral, requiring individuals to reject 'legal plunder' and return to constitutional principles and market competition. It references Ludwig von Mises' view of economics as the aggregate of individual human action. [Notes and References (Chunk 3)]: Bibliographic citations for the preceding text, including works by Weaver, Bastiat, Marx, Hayek, Sutton, and Anderson. [Edmund Burke on Inflation and Despotism]: Gary North analyzes Edmund Burke's 'Reflections on the Revolution in France' through an economic lens. Burke argued that the French Revolution's use of paper 'assignats' and the confiscation of property led to social instability, the destruction of honor, and the rise of a 'gambler mentality.' The section details the failure of the 'Law of the Maximum' (price controls) and the hyperinflationary results of the revolutionary government's policies. [Sapping the Foundation: Inflation by Ludwig von Mises]: Ludwig von Mises explains that inflation is caused by an increase in the quantity of money, which lowers the purchasing power of the monetary unit. He critiques the 'price level' metaphor, explaining that price changes occur unevenly (benefiting early recipients of new money at the expense of others). He discusses the historical failure of the German mark in 1923 and advocates for the gold standard as a necessary restraint on government spending. [Inflation: A Trick Done with Money]: F.A. Harper defines inflation as a 'trick done with money' by the government's money monopoly. He equates government expansion of the money supply to legal counterfeiting, which acts as a hidden tax. Harper argues that price controls are 'economic quackery' that fail to address the root cause (monetary expansion) and instead disrupt the market's ability to balance supply and demand. [The Principles of Price and the Failure of Controls]: Outlines four fundamental principles of price, explaining how reductions in price increase demand but decrease supply. It argues that government price-fixing inevitably leads to shortages or surpluses unless set at the market level, and describes the resulting economic chaos, including black markets and the diversion of labor into policing price controls. [From Price Lies to Rationing and Moral Decay]: Explains how price controls force prices to 'lie,' necessitating government rationing and the substitution of political favoritism for productive merit. The text argues that these laws promote widespread dishonesty and bribery, leading to a moral breakdown. It cites Lenin and Keynes regarding the destruction of capitalism through currency debasement and warns that continued controls lead to a socialist-communist system. [The Tragedy of Inflation: Much More than Higher Prices]: Bettina Bien Greaves defines inflation as monetary expansion rather than just rising prices, identifying the government and privileged banks as the sole sources. She details the uneven impact of new money, creating 'winners' and 'losers,' and explains how inflation causes illusory profits that lead to capital consumption and bankruptcy. The essay further explores how inflation distorts production patterns, causes malinvestment, and discourages the saving necessary for economic progress. [Inflation Versus Employment]: Henry Hazlitt critiques the popular belief that inflation increases employment, specifically targeting the Phillips Curve. Using historical data from 1948-1975, he demonstrates that the trade-off between inflation and unemployment is a myth. He identifies other causes of unemployment, such as minimum-wage laws and union privileges, and explains how inflation's long-run effect is to misdirect and eventually destroy employment through economic distortion and stabilization crises. [Lower Interest Rates by Law]: Percy L. Greaves Jr. argues against government attempts to lower interest rates by fiat. He breaks down market interest rates into three components: originary interest (time preference), risk premium, and the inflation premium. He explains that artificial rate suppression requires the creation of money out of thin air, which causes price increases, redirects the economy toward unsustainable production, and ultimately leads to recession or depression when the inflation stops. [Demand Deposit Inflation]: Anthony M. Reinach explains the mechanics of modern monetary inflation through the creation of spurious demand deposits. Using a 'Fiscal Pharmacy' analogy, he illustrates how government bonds sold to the Federal Reserve trigger a multiplier effect in the commercial banking system, turning an initial deposit into a much larger increase in the money supply. He critiques the Fed's 'weapons of control' as impotent when the government fails to balance its budget. [The Federal Reserve's Monetary Weapons and Their Impotence]: This segment analyzes the three primary tools of the Federal Reserve—Open Market Operations, Reserve Requirements, and the Discount Rate—arguing that they are ineffective at combating inflation. It details how political pressure to keep interest rates low and the Treasury's constant need to sell bonds forces the Fed to expand the money supply, effectively turning these 'weapons' into disguises for inflation. The text also discusses the historical decoupling of the dollar from gold and the impact of non-monetary factors like productivity and war on inflation. [The Making of an International Monetary Crisis]: Paul Stevens examines the historical evolution of international monetary crises, tracing the shift from the classical gold standard to the Bretton Woods system and the eventual rise of fiat currency. He argues that policy makers have consistently ignored the root cause of crises—excessive money and credit expansion—instead blaming capitalism and gold. The essay critiques the introduction of Special Drawing Rights (SDRs) as 'paper gold' and warns that an international fiat reserve system under the IMF will lead to massive world inflation and the erosion of private property rights. [Fiat and the Founding Fathers]: Elgin Groseclose discusses the constitutional intent regarding money, highlighting that the Framers explicitly sought to prohibit paper money (bills of credit) as legal tender. He traces the 'revolution' in American finance from the Civil War era to the Federal Reserve Act of 1913, which shifted the definition of money from a physical substance (gold/silver) to abstract 'purchasing power' (M1, M2). Groseclose argues that this departure from constitutional principles has led to moral debility and unconstrained government spending through inflation. [John Witherspoon: Disciple of Freedom]: Robert G. Bearce profiles John Witherspoon, the only clergyman to sign the Declaration of Independence, focusing on his economic wisdom. Witherspoon's 'Essay on Money' is used to illustrate his defense of gold and his opposition to paper currency and price-fixing. He viewed commerce as a voluntary contract and argued that government interference in prices is not only unjust but impracticable. The segment emphasizes Witherspoon's belief that industry and frugality are moral duties essential to national prosperity. [The Constitution and Paper Money]: Clarence B. Carson provides a detailed historical account of the Constitutional Convention's debates regarding paper money. He explains that the term 'bills of credit' was used to describe unbacked paper currency and that the Framers, influenced by the disastrous hyperinflation of the Continental currency and Rhode Island's failed experiments, intentionally omitted the power to emit such bills from the federal government's authorities. Carson argues that under the Tenth Amendment, since the power to issue paper money was neither delegated to the U.S. nor permitted to the states, it remains unauthorized by the Constitution. [Index and Publication Information]: Comprehensive index of names, concepts, and historical events discussed in the book 'Inflation is Theft'. Includes a brief history of 'The Freeman' magazine and its various incarnations under editors like Albert Jay Nock and Frank Chodorov, as well as pricing and ordering information for the Foundation for Economic Education (FEE).