Is inflation immoral?
Inflation occurs when the price of ordinary goods go up and people can no longer buy the things they need with the same amount of money. The compounded effects of even small percentage points of inflation is that over time wages haven’t kept up with inflation and the buying power of consumers has decreased. For example, my husband and I purchased a life insurance policy back in the 1980’s for $100,000 thinking it would take care of the family in the event of our death. Back in the 80’s, $100,000 was a lot of money but it would not go very far today. In addition, “inflation wipes out the savings of the government and people,” and the effects of inflation are so subtle that most people do not even realize what is happening …show more content…
The Federal Reserve Bank, the Central bank, buys debt from banks in the form of Treasury Bills, notes, bonds and Mortgage Backed Securities (Recent Fed Errors). Normally buying assets puts more money in the system and lowers the interest rate; however since interest rates are already at 0%, this only has the effect of putting more money into circulation, thus the name quantitative easing. What this actually does is increase the bank’s assets which injects more money into the economy. The Federal Reserve Bank then puts these assets on their balance sheet which they have purchased with money that they have literally created, out of nothing.
Why does the government do this? To stave off deflation, because they feel that “strong deflationary pressures are kept at bay by equally strong inflationary policies” (Leijonhufvud, 2015). What they actually mean by deflation is that inflation is not occurring at a normal rate of around 2 percent per year. Deflation is the new bogeyman of our century. However, during a time of increased production and efficiency gains, it only makes sense that things should cost less not more (Grant, Spring/Summer …show more content…
Inflation violates the “patterns of conduct usually accepted or established as consistent with principles of personal and social ethics” (immoral. (n.d.)., 2015). Counterfeiting is considered immoral because it puts false money into circulation. In a similar vein, “The Fed 's low-interest policy has turned into a shell game for the ordinary people who are unable to follow how the money flows from losers to gainers” (Leijonhufvud, 2015). The banks and large corporations which sell assets to the Federal Reserve Bank, who have first access to this new money are the ones who benefit while it chips away at the savings and buying power of retirees and savers. This has created a vast inequality in our country with the top 1% controlling most of the wealth because they are the ones who have access to this new money and the rest of us are left to deal with the effects of inflation and a declining standard of living. It’s like a giant Ponzi scheme where the people at the top profit and those who participate in the scheme last find themselves the losers. In addition, it allows politicians to expand government, running up exorbitant amounts of debt, without raising taxes. Consequently, it is the special interest groups which benefit from these monetary policies at the expense of taxpayers and ordinary citizens (Melloan, Spring
Inflation occurs when the price of ordinary goods go up and people can no longer buy the things they need with the same amount of money. The compounded effects of even small percentage points of inflation is that over time wages haven’t kept up with inflation and the buying power of consumers has decreased. For example, my husband and I purchased a life insurance policy back in the 1980’s for $100,000 thinking it would take care of the family in the event of our death. Back in the 80’s, $100,000 was a lot of money but it would not go very far today. In addition, “inflation wipes out the savings of the government and people,” and the effects of inflation are so subtle that most people do not even realize what is happening …show more content…
The Federal Reserve Bank, the Central bank, buys debt from banks in the form of Treasury Bills, notes, bonds and Mortgage Backed Securities (Recent Fed Errors). Normally buying assets puts more money in the system and lowers the interest rate; however since interest rates are already at 0%, this only has the effect of putting more money into circulation, thus the name quantitative easing. What this actually does is increase the bank’s assets which injects more money into the economy. The Federal Reserve Bank then puts these assets on their balance sheet which they have purchased with money that they have literally created, out of nothing.
Why does the government do this? To stave off deflation, because they feel that “strong deflationary pressures are kept at bay by equally strong inflationary policies” (Leijonhufvud, 2015). What they actually mean by deflation is that inflation is not occurring at a normal rate of around 2 percent per year. Deflation is the new bogeyman of our century. However, during a time of increased production and efficiency gains, it only makes sense that things should cost less not more (Grant, Spring/Summer …show more content…
Inflation violates the “patterns of conduct usually accepted or established as consistent with principles of personal and social ethics” (immoral. (n.d.)., 2015). Counterfeiting is considered immoral because it puts false money into circulation. In a similar vein, “The Fed 's low-interest policy has turned into a shell game for the ordinary people who are unable to follow how the money flows from losers to gainers” (Leijonhufvud, 2015). The banks and large corporations which sell assets to the Federal Reserve Bank, who have first access to this new money are the ones who benefit while it chips away at the savings and buying power of retirees and savers. This has created a vast inequality in our country with the top 1% controlling most of the wealth because they are the ones who have access to this new money and the rest of us are left to deal with the effects of inflation and a declining standard of living. It’s like a giant Ponzi scheme where the people at the top profit and those who participate in the scheme last find themselves the losers. In addition, it allows politicians to expand government, running up exorbitant amounts of debt, without raising taxes. Consequently, it is the special interest groups which benefit from these monetary policies at the expense of taxpayers and ordinary citizens (Melloan, Spring