ss 1,2

prout.econ

Cause of Inflation

December 17, 1994

Q: What are the causes of inflation and what are the ways to control inflation?

In most cases, inflation is a direct result of over expansion. When a society becomes greedy, desiring more than their due, then expansion goes beyond the basic needs of the people and, as a result, inflation is developed. But this inflation will not occur if economic development is to serve the basic needs of the people and not to serve the greed of a few. As long as the greed of a few dominates the needs of the many, inflation and cycles of inflation and depression are unavoidable. But if the economy is locally based and responsive to the needs of the people, if it is regulated to avoid excess accumulation of wealth, and if greed does not dominate, if greedy tendencies are regulated and no one is allowed to exploit others economically for personal reasons, then the cycle of inflation and depression should end. When there is over-accumulation of wealth in one sector and underdevelopment in another, when greed and acquisition dominate, inflation is bound to follow.

When a country has lost its balance mentally, when there is disruption of the fundamental balance in the society, then economic policies reflect this imbalance. Some will become very wealthy, some will become very poor. They will go hungry, and wealth will become very concentrated in one area, thereby making a deficit in another area. And in this imbalanced condition, where greed and acquisition dominate, the economic stability of a given society is bound to be compromised, and thus inflation and depression follow.

If you would control inflation, you must control this concentration of wealth among a few, this hoarding of wealth. When there is a free and direct exchange between production and distribution, between those producing and those consuming, and the product goes out and the compensation comes in in a free flowing direct fashion with very little interference, then the society will remain economically stable and healthy.

But when there is a siphoning off of these profits to be accumulated by a few for their personal satisfaction, then there begins an inequity between production and reception of compensation, and so the free-flowing cycle becomes disrupted by this storage of resources with the elite. Ultimately, the cycle of production and consumption becomes disrupted. Those who produce have become weakened in their capacity to produce because of this siphoning off of resources to the greedy hands, and so they must charge more and more. The price becomes inflated so that they can keep going because they are not getting their needs met. So the consumer must pay more and more. The inflation cycle has begun and why? Because what was the proper due for the production has not come to the worker, has not come to the factory, has not returned as it should. It has gone to storage in the greedy hands of a few.

And so the equity and the equilibrium has been disturbed in the economic cycle, and there becomes impoverishment in one end and then inflation ensues and finally depression. Because the one who produces must charge more, the consumer must pay more. But they have no finances to pay more, and so they must buy less. And then the production goes down, and then there is a shortage of goods, and the goods are far too expensive, and the consumer cannot consume. But in the production, the consumer also loses their job, and the capacity of the consumer goes down, and, overall, the cycle becomes depressive in the economic sphere. But the primary cause of this is the hoarding of resources, hoarding among a few who are very greedy.