One of the ways that the government uses propaganda to increase its own power is by changing the meaning of words.

The word “inflation” is a perfect example.

Supporters of the monster state use this not to describe actual inflation, but rather the effects of it.

The founding generation had a much better word for it: depreciation. That is, when the supply of money is increased – its purchasing power decreases, resulting in price increases for virtually everything.

Benjamin Franklin put it this way in 1779, “The depreciation of the American Paper is solely owing to the excessive Quantities.”

Writing to Franklin, Charles Carroll of Carrollton agreed, “My greatest apprehensions arise from the depreciation of our paper money. If we emit more bills of credit, they will fall to nothing.” 

In a 1776 letter to John Adams, Nathanael Greene noted the same, “The Emission of such large sums of money increases the price of things in proportion to the sums emitted.” 

These are just a few of many examples of the Founders and Old Revolutionaries understanding what so few seem to grasp today. The more that the money supply increases, the less the money is worth, and ultimately, the more that price inflation happens.

The “experts” want us to believe that inflation is just on the price end, that it is a supply chain problem, or merely an evil corporation trying to rip you off. They never point to government – or the central bank – being the source of the problem – the ones actually ripping you off.

As William Grayson wrote in a letter to James Madison in 1786, “For where is there greater act of despotism than that of issuing paper to depreciate for the paying debts, on easy terms.”

Politicians today absolutely love the money printer. As Ron Paul noted, it operates as a tax – and a sneaky way for them to prop up the monster state.

Big-spending politicians are huge beneficiaries of this money printing through the government-run fiat money system. The Fed’s purchases of US debt enable Congress to massively increase welfare and warfare spending without increasing taxes to politically unacceptable levels. The people pay for the welfare-warfare state via the Fed’s hidden and regressive “inflation tax.”

In a 1778 letter to George Washington, Gouverneur Morris, who later wrote the Preamble to the Constitution, made a similar observation, “The Depreciation in the Interim hath operated as a Tax.”

Benjamin Franklin also referred to money printing as a “gradual tax” on the people. Here, from a 1780 essay “Of the Paper Money of America

“The general Effect of the Depreciation among the Inhabitants of the States, has been this, that it has operated as a gradual Tax upon them. Their business has been done and paid for by the Paper Money, and every Man has paid his Share of this Tax according to the Time he retain’d any of the Money in his Hands, and to the Depreciation within that Time. Thus it has proved a Tax on Money.”

He recognized that when you increase the money supply, it doesn’t have an immediate increase in prices, but instead, it happens – often slowly – over time. The longer you hold the money, the less it is worth, and the more of this inflation tax you end up paying in the long run.

This manipulates the markets, and powers government spending. Mike Maharrey summed it up:

Government is never free. All spending has to be paid for either by direct taxation or borrowing. Borrowing simply pushes taxation down the road. But borrowing is more politically palatable than raising taxes. The problem facing the U.S. Treasury is that it is borrowing beyond the market’s ability to support it.

Enter the Federal Reserve.

And, of course, the Fed has been printing at insane levels in recent years – adding a mountain of fiat to an already unsustainable path.Maharrey continued:

The Fed makes all of this borrowing and spending possible by backstopping the bond market and monetizing the debt. It is the engine that powers the biggest, most powerful government in the history of the world.

In a process known as “debt monetization,” the Fed buys U.S. Treasuries with money created out of thin air. This creates artificial demand in the bond market, propping Treasury prices up and holding interest rates down. It also injects billions into the economy. This is the actual definition of inflation. And rising consumer prices are a consequence of inflation.

Even without the modern technologies that are powering things today, George Washington understood the grave dangers of fiat money. Writing to Jabez Bowen he noted:

“Paper money has had the effect in your State that it ever will have, to ruin commerce, oppress the honest, and open a door to every species of fraud and injustice.”

Of course, this will never change as long as people don’t understand the root cause of the problem – government-controlled fiat money.

Even at the time of the founding, Franklin recognized that money printing operates as “a Kind of imperceptible Tax” – it’s a way for government to hide how it pays for all its unconstitutional programs.

That’s why the term “depreciation” is far more appropriate than “inflation,” because it at least points to the cause of the problem – and the inevitable result of  one’s purchasing power going down.

Ultimately, we’re going to continue the boom-bust cycle of price rises and crashes without change until people understand the cause and effect.

Thomas Jefferson warned us of this back in 1819, saying, “The evils of this deluge of paper money are not to be removed until our citizens are generally and radically instructed in their cause and consequences.”

Alan Mosley contributed to this article.

Michael Boldin

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