We all know that inflation is caused by an increase in the currency supply of whatever nation issues a currency. The dictionary even defines inflation as such. You may believe that this is an open and shut case, but there are those who believe inflation is caused by other than what the dictionary definition says it is, and by something other than government printing presses. You may never have heard this theory, but it must be explained, because it is firmly believed by some.
Theoretically, according to those who expound on this, if you have a society with a fixed amount of money; let’s say dollars, “usury” (interest to them) will cause inflation. Here’s how they see it. Say there are a million dollars in circulation, and a thousand citizens. The number of dollars and the number of citizens will stay fixed, according to this theory. If a person borrows dollars from another, and charges interest, no matter how small, this is supposed to cause inflation, because when interest is charged, not only does the borrower repay the dollars, but the interest he pays, causes prices to go up, and that is inflation. Therefore, according to these people, any interest is usury, and prohibited by the Bible, or some such. Inflation isn’t prices going up. That is the result.
Once again, we must go to the dictionary. Usury is defined as loaning money at an “excessive interest rate,” not just interest, but at high interest. I ask those who adhere to the theory that all interest is usury, and causes inflation: If dollars change hands, because of interest charged for a loan, and the number of dollars remains constant, as does the citizenry, how can the interest possibly cause actual inflation? True, the man loaning the dollars, may have more dollars than he began with, since he charged for the use of his capital, and the borrower may have less, because he paid for the use of someone else’s capital, but the supply of dollars has remained the same, so where is the inflation? Answer: There is none. Only the person with the capital has charged someone for the use of it. The borrower is poorer, and the capitalist is richer. This is the way the capitalist system works, and should work.
To quote a paragraph from a wonderful little booklet which I have been handing out to my clients, (Common Sense II), “Once usury becomes accepted in a society a vicious cycle reveals itself: Interest payments cause inflation (a devaluation of the currency) because the cost of usury is passed onto the consumer in the form of higher prices for goods and services. Higher prices increase the cost of living and reduce the amount of production-generated capital available. Demand for loans at interest increase under these conditions-which causes further devaluation of the currency and deepening of this vicious cycle.” Balderdash! (I understand this section will be rewritten. I hope so!)
If this theory is the cause of inflation, then the man delivering the merchandise, and charging for his services, is causing inflation, because his transportation charges are built into the cost of merchandise. If this theory is the cause of inflation, rather than an increase in the money supply, the person growing wheat should give it away freely, because if he charged for his wheat, it causes the price of bread to go up. Actually, this inflation theory is Karl Marxian, which says, “From each according to his ability, and to each according to his need.” These goofy inflation theorists should say, “Let’s form a commune, and everything will be free, and we won’t be bothered by this filthy lucre, and those interest charging, evil, money changers that Jesus warned us about when he .”
If a society had a fixed number of citizens, (impossible unless everyone is sterilized), and a fixed amount of currency, (shut down the gold mines after “enough” is reached?), in short order, everyone would be dead. Why? Because they could not reproduce, strive for excellence, do their best, work hard and excel, or attempt to get rich and be comfortable. They would all be peas in a pod. How grotesque! As free men, and those of us who expound freedom, every man is entitled to do his best, charge what the market will bear, and expand his horizons. If I have done well by using my noggin, energy, and assets; is there any reason, why I should not charge for the use of my capital? Is my capital any different from the farmer’s wheat, or the transporter’s truck?
I can find no Biblical prohibition of charging for the use of one’s capital, other than the so-called Jubilee Years, which meant that the land would come to a complete rest after seven cycles of seven years. The Jubilee also meant that Hebrews that had sold themselves into slavery would be freed, and all ancestral lands returned, because the law prohibited land from being sold in perpetuity. I know of no “Promised Land” today, which would make the ancient Jubilee practicable, or even possible. Not to get involved in Scripture, but Jesus said in Romans 8:2, that he set his followers free from the ancient laws. Do NOT write me with your interpretation of scripture!
We happen to live in the year 2003, and Stott’s law applies 100%, as well as dictionary definitions of words. This means that, as my law states, “The more of anything there is, the less they will be worth,” and inflation is caused by an increase in the currency supply. The dictionary also states that usury is “excessive interest charges,” not simple interest.
The usury people, do not accept the proven fact, that inflation is caused by printing press money, but think we live in a sort of closed society, where no one reproduces, no currency supply is increased, and no one should charge for loaning of capital. Luddites? They think that interest alone is evil and usurious, and charging for other things in the chain of supply and demand is OK. According to them, it’s fine to get rich, think, improvise and improve, but after all this is accomplished, you should lend your hare earned bucks to some poor ignoramus who has none, and at no charge. When it snows in July, it’ll happen. I GIVE to those whom I think are deserving, but loan to no one. That’s sure way to lose friends.
I honestly believe that if all the wealth were re-distributed, say at a 50 year “Jubilee;” within ten years, the same people would have it all back again, in the same amounts they had before the “Jubilee.” The same drunks would be staggering around, the same morons would watch sit-coms on TV, buy stupid cars, and save dollars in a bank. The same people would do the same things. It is impossible to defeat up-bringing, genetic structure, exposures, and influences. When I was a kid, I listened on the radio to, “Jack Armstrong, the All American Boy,” which was sponsored by Wheaties, the Breakfast of Champions. I still eat Wheaties! (Raise the flag for Hudson High boys, show them how we stand). It’s up-bringing and exposures with the Wheaties for me.
Suppose all was the same as it is now, with population exploding around the world, and no one charged interest for a loan, which would please these Luddites. The world would collapse, quite simply. If you own something, (Capital), why would you ever allow someone else to use it without charge? Hertz auto rental, has capital of many automobiles. Should they loan their capital for no charge? Banks have deposits belonging to their customers. Would their customers want the bank to loan their dollars for no charge? An apartment owner, has capital in his apartments. Should he let people live in them free, to satisfy the usury gang?
It’s been a long time since the Israelites went to the Promised Land, and it never worked very well anyway, so I suggest that it not only won’t work now, but didn’t then either, and it defies all laws of economics and even good sense, to say that interest charged causes inflation. It ain’t so! Protect yourself!