Tutor Nick P Quotes (112) Milton Friedman – Inflation Is Taxation Without Legislation
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Tutor Nick P Quotes (112) Milton Friedman – Inflation Is Taxation Without Legislation

Hi this is this is Quotes 112 . The quote
today is by Milton Friedman He was an American economist and a Nobel Prize
winner. You know, for economics. All right, and here is his quote. The quote is actually pretty short
“Inflation is taxation without legislation.” Okay. So let’s let’s take a
note here. Most people understand inflation as a progressive increase in
prices. Yeah so people have a general idea about inflation. They know that
prices going up is inflation and if you look at the regular dictionary it does
mention that. However if you look at a business dictionary is slightly
different. Most business dictionaries list inflation as an increase in the
amount of money in an economy in regard to goods and services. Well this kind of
helps to explain why inflation comes about. I don’t think the average person
really realizes why we get it. They know when inflation hits them. They know when the prices go up in the store. But a lot of them don’t really quite realize what
causes the inflation. Okay. So let’s continue with the note here. When central
banks print more money, even though to be honest, nowadays they’ve hardly
they don’t really even print more money. They just push buttons to create more
money and most people also don’t realize that they don’t actually have the money
to back up that. They’re creating they once you investigate into this, you find
out that you print it out of thin air. They print it from nothing. You know if
you did this or I did this or any average person did this this would be
illegal. You’d be called a counterfeiter but they
do it, and then they lend it to the government. And the government has to pay
them back plus interest. They increase the money supply and in turn, each dollar
becomes worth less. Worth less money yeah. iI’s the same idea of supply and demand
when there’s a real where a large supply of something and the demand does not
increase, the price actually goes down. So the value of each dollar goes down and
that’s what ends up leading to your inflation. Now the day
they do it you don’t notice it. They, I think they say usually it takes about five
or six months to work its way into the economy.
Every time they print more money and then that’s when you end up seeing the
prices increase. Okay. So people end up losing buying power because each
dollar is worth less. The more they print. So indirectly it ends up being a tax on
the people without them realizing it because they don’t see more taxes taken
out of their paycheck. Yeah so indirectly it ends up being a tax. You,
you don’t see It come out of your paycheck, but you know that you’re the
same. For example like a hundred dollars it’s not buying as many groceries as it
used to buy a year ago, or several years ago, five years ago , ten years ago. It
keeps shrinking and shrinking and shrinking and indirectly it is a tax
that ends up going back to the central bank. Most people don’t realize it,
because the legislators themselves did not actually vote for the tax. So that’s
why he’s saying inflation is taxation without legislation, Your Congressman
your Senators didn’t directly vote for this. Even though you probably could
argue that they did vote, let’s say sometimes they vote for a budget and they voted for
a budget where we really don’t have money to cover all their spending , and I
guess they know the money’s got to come from somewhere. But if it ends up coming
from the central bank and they print more money indirectly it ends up being a
tax. That’s what, that’s what Milton Friedman is trying to let you know. without really
realizing it , legislators pretend to be blameless. Yeah they, they almost prefer this way because
if they’re the ones that raise the tax then you will probably say you know
terrible. You did this. It is because they didn’t directly raise taxes this is what Milton
Friedman is trying to tell you. So anyway I hope you got it. I hope it was informative. Thank
you for your time. Bye-bye.


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