United States Inflation Rate Increases

Anybody familiar with economics (real Austrian economics not that idiotic idea put for by Keynesian) will tell you printing money leads to inflation. Surprisingly many people don’t realize that the United States is no longer using a commodity backed money and instead gave authorization to a private entity (the Federal Reserve is a private entity, not a government entity as the name would imply) to print our money. During this economic downfall the Federal Reserve has been printing up a shit ton of money and not surprisingly it’s leading to an increased rate in inflation.

The inflation rate in the United States has rose 0.5% in February alone. 0.5% may not seem like a lot but it is when you realize this was in one month. The rate of inflation effects the price of all consumer goods. Some consumer goods have rising faster including food and fuel:

Food price inflation was a key driver of the increase. Food costs went up by 0.6% month-on-month, the most in two-and-a-half years.

Petrol prices rose even faster, up 4.7%. But apart from those two categories, price rises were more muted.

Fiat currencies are a bad idea and this demonstrates why. There is no control over how much fiat currency can be pumped into a system and the more that gets pumped in the more inflation occurs. Commodity based money on the other hand has a method of control, the commodity. There is good reason why Austrian economists promote reestablishing a gold standard; gold was a commodity chosen by the market to serve as money. Gold is fairly difficult to obtain so its value stays relatively stable (unless you’re buying it with constantly inflating fiat currency). Its also a self-regulating currency which restricts the spending of government (and regular people to) since any entity they borrow to can demand their debt be repaid immediately in gold. With this threat looming the government can only afford to borrow as much money as they have gold to back.

If you have any interest in commodity based money a great read on the subject is The Case for a 100 Percent Gold Dollar by Murray Rothbard. I’d also recommend reading another title by Rothbard, What Has Government Done to Our Money. These two reads (both freely available at the linked locations) do a marvelous job of explaining commodity based money and the reason its needed. The titles also talk about the history of monetary policy in the United States which is probably the best argument for the return to the gold standard there is.