Fiat Inflation

The fact is that the problem of inflation in a fiat money system is almost inevitable. It can be briefly summarized as follows:

As it is now, governments are able to create as much money as they want at any time. They do not actually need to tax the public or borrow from them in order to get more money.

And although we are used to it and do not feel the personal effects of inflation, governments actually spend more money than they receive either through taxation or borrowing.

Basically, they create a credit-backed money supply. This means that on the government balance sheet there is money from regular sources (taxation and borrowing) and there is also money created by fiat.

For instance, the government may receive $1000 in taxes and then they spend $2000. This would be considered inflationary because while there is only $1000 of 'real' money (from taxation) being spent, the government has created another $1000 with which to spend.

This is why governments are constantly running deficits, because they must spend more than they receive.

(Above text Generated with GPT-3 and Read by ME (A Human-Being) for accuracy and gauge consistency of content.)