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I often discuss economic and political issues with my friends, and one of the very few statements everybody agrees upon is this one: "Monetary expansion is tantamount to theft". It is pretty obvious that if the money supply is increased by one per cent, it means that every Euro in our pocket is worth one per cent less. But when I say that this is totally unacceptable and needs to be changed, people tend to defend the status-quo. Here is a typical dialog:
-- But what if national economy lacks money? Increase in production needs to be supplemented by increase in money supply!
-- Why is that?
-- Because otherwise deflation will occur and prices will drop.
-- Would it make you very upset?
-- Well, not really. But it is harmful for the economy.
-- If it was so, why do we send the counterfeiters to jail? They are doing a good job of saving our economy from the horrors of deflation.
-- Because it is tantamount to theft. They steal from the public.
-- Why should the government be allowed to steal?
-- Because the government spends the money on social programs. We might consider this as a form of taxation.
-- So, increase in money supply is a tax on savings. How much do you pay annually?
-- How do I know?
-- So, it's a tax that nobody authorized the government to collect, its rate is arbitrary and secret, and very few people are aware about its existence.
-- Yes, but the government needs this tax, I suppose. It helps the poor, after all.
-- But the poor are precisely the people who are hit hardest by this!
-- How is that?
-- Well, it is a tax on monetary savings, flat rate, isn't it? Well, the poor people have all their savings in cash, because nobody will buy my clothes or even furniture. The rich, however, have only small part of their savings in bank accounts, whereas the greatest part is invested in real estate, shares, bonds, securities, royalties, copyrights, etc. Many of the entrepreneurs borrow money from the banks to finance their business. It means that the poor subsidize the rich.
At this point people usually agree that the monetary expansion is evil and should be stopped ASAP. Unfortunately, nobody believes that it is possible, even in democratic countries.
Actually, I don't really care who suffers most from injustice -- rich or poor. Theft is unacceptable for me and I'd like to stop it. But it's funny how it changes the people's attitude. They would not tolerate injustice if it were not for their illusion that the rich are paying the greater part of the bill. I think they really deserve whatever the government does to them.
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