By Sue Peters

What is inflation? When the cost of goods and services increases in price, the person experiences inflation. The value of the working person’s paycheck or the value of a retired person’s savings is lessened. Another way to say this is “the purchasing power of the money is less”. That is, the goods and services that a certain amount of money purchased before inflation, that same amount of money purchases less goods and services…less purchasing power.

Inflation in prices of goods and services may cause some people to move to a cheaper home, or start to eat some meals at the local soup kitchen. In many cases, people decide to borrow on a credit card to pay for basic needs: credit card debt increases. What is sure is people’s quality of life is reduced. Yes, when you pay with a credit card, the bank is CREATING money and sending it to the person you owe.

So what causes this reduction in the purchasing power of money? What causes the price of goods and services to rise?

Cause of inflation: The cause of inflation is the creation of money by private commercial banks. Remember the ‘secret’ of our U.S monetary system – information the financial elites keep out of our schools, press, media, legislative chambers, etc.: whenever a private commercial bank, like JPMorgan Chase or Citibank, signs a loan contract with a borrower, the bank CREATES the loan principal in the borrower’s bank account, charges them interest until the loan is paid off, and takes the loan collateral if the borrower fails to pay.

It is very hard to believe, because we have been kept in the dark for so long. We are told the bank is lending its own money or the money of another depositor, who wishes to earn interest also. This is a cover story. The truth: since 1784, when the first private commercial bank was given a charter from New York State, every commercial bank since is CREATING money when ‘lending’. Here is how Alexander Hamilton described it: “Every loan, which a Bank makes is, in its first shape, a credit given to the borrower on its books…The Borrower frequently, by a check or order, transfers his credit to some other person, to whom he has a payment to make…” You are doing the exact same thing when you mail a physical check or use your bank debit card to digitally transfer your bank deposits to your landlord, power company, food store, etc.

Effects of inflation on citizens: When the banking system CREATES more money for borrowers, and existing goods/services in the economy do not increase, the cost of living increases. People suffer.

For those citizens with a fixed income or whose job income stays the same, they must either give up some part of their quality of life or go into debt (to the banks of course!). If the person cannot borrow from a bank, they must reduce their quality of life: skip meals, move to cheaper housing, move their children from private to public school, go eat at a local food pantry, skip doctor and dentist appointments. Recently, I listened to a NYC resident plead with the Rent Guidelines Board to not raise rents, since she is not able to buy enough food for her family with price inflation.

For those people who can borrow, they will have to figure out how to pay the bank back. If they are late or fail to pay credit card debt, they will get a bad credit rating from the bank. This may keep them from getting loans in the future and even affect job opportunities, when the personnel department does not like the bad credit report. If they fail to pay collateralized loans, they may lose their house to the bank, have to declare bankruptcy, or lose their business and source of income.

Summary: In the next issue, I will be writing about deflation, the opposite of inflation. Both inflation and deflation are two money ‘games’ of the private banking system. Both benefit the banks, and do violence to lives.

Monetary decisions most directly affect citizens’ lives: prices, employment, housing, etc. Therefore, over time, whoever controls the nation’s money system controls the nation. Unless we, the citizens, make sure our elected representatives take back control of the nation’s money creation, we will be at the mercy of the financial elites of the banks (who have no mercy).

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