Page 180 - TrumpsEconEra_Flat

Chapter 8: Money - The Seeds of Destruction

FIAT CURRENCIES
When nations replace sound money with fiat
currencies, inflation is never far behind. Under the gold
standard, we could not increase the money supply
unless we increased the quantity of gold. Under a fiat
system, there is no limit to money creation.

In Karl Fenninger’s book, Leverage – How Cheap
Money Will Destroy the World; he shows how money
creation will destroy economies. The major countries of
the world have gone from capitalistic systems to crony
capitalism, where powerful interests determine
government policy. Instead of slow and steady growth,
the rich and powerful engineer economic bubbles so
that they can take advantage of the swings. Special
interest groups profit as the economy zooms upward,
and the government protects them from losses when the
economy tanks.

STAGFLATION

When inflation is persistent and deep-rooted, it
will take time before reducing the money supply will
lower prices. Before prices begin to head south, the
economy may experience more unemployment.
Employment may improve when the Fed reverses itself
and increases the money supply, but this may cause
more inflation. If the public demands action to bring a
halt to the inflation problem, tighter monetary policy
will worsen the unemployment problem, and when
unemployment worsens— well you get the idea.

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