Eternal Question 09: What is Inflation?
Where did it All Go?
As an Independent Research Scientist, I research the nature of the human condition and mankind's connection to Spirituality. I do so by research and first hand experimentation.
(Please read the Eternal Questions and their answers in order, as the answers build upon one another in an ordered and sequential format.)
The Nature of Inflation:
There are two (2) types of Inflation:
1) Natural Inflation, and
2) Artificial Inflation
Natural Inflation is due to the increased expense of obtaining a diminishing return of harvested commodities. (example: mining in a played out mine.)
Some degree of natural inflation shall always be with us until the science of transmutation of the elements is perfected.
- The immediate and ongoing solution to natural Inflation is the discovery of new technologies and cheaper new materials.
Artificial Inflation is caused by increasing the amount of money in circulation without increasing the underlying amount of commodities, like Gold, currently existing in the system, etc.
With more money in circulation, prices will rise to what the market will bare, and - existing commodities end up costing more.
Governments may pay down huge incurred debts with money that is worth-less by the practice of creating Artificial Inflation.
With more money in circulation - governments may then charge higher taxes and devalue the currency. Unfortunately it is the poor who suffer the most.
1) Natural Inflation - leads to Innovation and Invention by Necessity.
2) Artificial Inflation - leads to unfair transfers and consolidation of Wealth into the hands of the Few, and destroys the underlying stability of an economy.