Hi this is this is Quotes 112 . The quote today is by Milton Friedman He was an
American economist and a Nobel Prize winner. You know, for economics. All right, and here is his quote.
The quote is actually pretty short "Inflation is taxation without
legislation." Okay. So let's let's take a note here. Most people understand
inflation as a progressive increase in prices. Yeah so people have a general
idea about inflation. They know that prices going up is inflation and if you
look at the regular dictionary it does mention that. However if you look at a
business dictionary is slightly different. Most business dictionaries
list inflation as an increase in the amount of money in an economy in regard
to goods and services. Well this kind of helps to explain why inflation comes
about. I don't think the average person really realizes why we get it. They know
when inflation hits them. They know when the prices go up in the store. But a lot of
them don't really quite realize what causes the inflation. Okay. So let's
continue with the note here. When central banks print more money, even though
to be honest, nowadays they've hardly they don't really even print more money.
They just push buttons to create more money and most people also don't realize
that they don't actually have the money to back up that. They're creating they
once you investigate into this, you find out that you print it out of thin air.
They print it from nothing. You know if you did this or I did this or any
average person did this this would be illegal. You'd be called a counterfeiter but they do it, and then they lend it to the
government. And the government has to pay them back plus interest. They increase
the money supply and in turn, each dollar becomes worth less. Worth less money yeah.
iI's the same idea of supply and demand when there's a real where a large supply
of something and the demand does not increase, the price actually goes down. So
the value of each dollar goes down and that's what ends up
leading to your inflation. Now the day they do it you don't notice it. They, I
think they say usually it takes about five or six months to work its way into the
economy. Every time they print more money and
then that's when you end up seeing the prices increase. Okay. So people end up
losing buying power because each dollar is worth less. The more they print.
So indirectly it ends up being a tax on the people without them realizing it
because they don't see more taxes taken out of their paycheck. Yeah so
indirectly it ends up being a tax. You, you don't see It come out of your
paycheck, but you know that you're the same. For example like a hundred dollars
it's not buying as many groceries as it used to buy a year ago, or several years
ago, five years ago , ten years ago. It keeps shrinking and shrinking and
shrinking and indirectly it is a tax that ends up going back to the central
bank. Most people don't realize it, because the legislators themselves did
not actually vote for the tax. So that's why he's saying inflation is taxation
without legislation, Your Congressman your Senators didn't directly vote for
this. Even though you probably could argue that they did vote, let's say sometimes
they vote for a budget and they voted for a budget where we really don't have
money to cover all their spending , and I guess they know the money's got to come
from somewhere. But if it ends up coming from the central bank and they print
more money indirectly it ends up being a tax. That's what, that's what Milton
Friedman is trying to let you know. without really realizing it , legislators pretend to be blameless. Yeah
they, they almost prefer this way because if they're the ones that raise the tax
then you will probably say you know terrible. You did this. It is because they didn't
directly raise taxes this is what Milton Friedman is trying to tell you. So anyway
I hope you got it. I hope it was informative. Thank you for your time. Bye-bye.