Ron Paul: When It Comes to Inflation the Mainstream Is All Mixed Up (Video)

Inflation came in hotter than expected at 2.1%. A CNBC report said the number “pushes the economy toward a potential danger zone for inflation.”

Analysts had expected January inflation to come in at 0.3, after being up by 0.1 the previous month. Instead, the December number was revised up to 0.2 and January came in at 0.5. As Peter Schiff pointed out in his podcast, if you multiply 0.5 by 12 months, it comes to 6% inflation per year.

In his Feb. 16 Liberty Report, Ron Paul talked about inflation and its effect on everyday Americans. He said when it comes to this subject, the mainstream is all mixed up. More significantly, the creation of new money doesn’t impact everybody equally. Some benefit at the expense of others. 

Paul noted that some analysts are starting to throw the stagflation term around. This is when prices rise even as economic growth remains sluggish.

People get baffled by the idea that you have prices going up and it’s inflationary but the economy is not doing so well. And conventional wisdom is that a healthy economy causes prices to go up and vice versa and they think that is good. If you need jobs, you raise prices. Anyway, I think they’re all mixed up on this.”

As Liberty Report co-host Chris Rossini pointed out, one of the difficulties in talking about inflation is the fact that the powers-that-be have redefined the term.

Inflation used to mean the creation of new money. So when a central bank would create new money, they were inflating the currency. Today, it means a rise in prices, which is actually the effect of creating new money. So, they have taken away focusing on the cause and now you’re only supposed to focus on the effect. And ironically, you’re supposed to look to the Federal Reserve to fight inflation, even though they are the cause of it.”

This is how after three rounds of quantitative easing – essentially printing money – economists can point and say, “See, look! No inflation. Consumer prices haven’t risen!” But the quantitative is inflation. We just haven’t seen the impact on prices. Yet. And we’ve seen plenty of inflation in asset prices. Just look at the stock market.

Ron Paul pointed out a very simple, but often overlooked fact.

It’s an illusion to think that increasing monetary units is actually creating wealth. It has nothing to do with it. In fact, it distorts wealth creation because it distorts the economic picture.”

Inflation is also a facilitator. It facilitates big government.

Whether they want wars or welfare, they can delay the spending and the penalties. So, this is actually a threat.”

What a lot of people don’t realize is the Federal Reserve actually serves as a taxing authority. Of course, the central bank can’t pass a tax increase. But the creation of money is, in fact, a tax.

If they can take a dollar and reduce the value by 50%, they have liquidated debt, which is always necessary. But it’s also a tax because the people’s income gets lowered as well. But the big thing is, not everybody suffers the same consequences … The people who get the money first – the government, big banks, the big corporations, the military-industrial complex – benefit.”

Ron Paul hit the nail on the head when he said the problem with the rich getting richer and the poor getting poorer is a direct effect of all this central bank intervention.

It’s not because of a free market. It’s caused by crony capitalism and our monetary system.”

Get Peter Schiff’s most important Gold headlines once per week – click here – for a free subscription to his exclusive weekly email updates.
Interested in learning how to buy gold and buy silver?
Call 1-888-GOLD-160 and speak with a Precious Metals Specialist today!