Consequences of Inflation

Marc Faber describes one of the consequences of inflation:

We know one unintended consequence, and this is that the middle class and the lower classes of society, say 50% of the US, has rather been hurt by the increase in the quantity of money in the sense that commodity prices in particular food and energy have gone up very substantially. And, since below 50% of income recipients in the US spend a lot, a much larger portion of their income on food and energy than, say, the 10% richest people in America and highest income earners, they have been hurt by monetary policy. In addition, the lower income groups, if they have savings, traditionally they keep them in safe deposits and in cash because they don’t have much money to invest in the first place. So the increase in the value of the S&P hasn’t helped them, but it helped the 5% or 10% or 1% of the population that owns equities. So it’s created a wider wealth inequality, and that is a negative from a society point of view.

He discusses this topic and more in an interview with Chris Martenson.

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  1. I don’t think the consequences on the little people of ZIRP and money printing should be described as unintended. It would be more accurate to refer to them as collateral damage. The politicians and the bankers are willing to sacrifice the middle class in order to continue their accumulation of power and wealth. Eventually, this policy will wipe out the middle class as their salaries lose purchasing power and taxes continue to rise.

    In fact, the ever increasing taxes called for by our leaders are especially cruel. What’s the point of taking $10 or $20 thousand from a hard working family or small business when the Fed can push a button and generate $100 billion every day? Meanwhile, connected big companies, like GE, pay nothing. Fortunately, the MSM, NPR and PBS keep a constant stream of propaganda going to convince the masses that this rip off is not really happening. Joseph Goebbels would envy the propaganda machine that allows this greatest theft in history to continue.

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