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A.C.Bhaktivedanta Swami Prabhupada
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© 2004 - Hansadutta das
The Inflation GameMore Than $69 Billion Trade Deficit—to USA's Advantage? Who are the Losers?
by Hansadutta das
- October 12, 2006 - by JEREMY W. PETERS, The New York
U.S. Trade Deficit Widens to Record
Inflation means the government is printing paper money [or issuing
bonds] without sufficient gold in reserve. During inflation, money is
abundant, but it is worthless. If we buy something at a fixed price
this year, 10 years from now, if money has inflated 20 times, we shall
have got the same thing for practically nothing. Soon the economic
bubble will burst, and all the paper money will become completely
worthless. The public will lose its faith in paper money. People will
start bartering—"I have a banana, and you have an apple, so let's
trade." The more money inflates, the easier it is to pay off debts.
During inflation, the debt collector loses while the debtor is getting
ahead, because the debt collector is getting nothing; whereas the
debtor is getting something in tangible goods.
Hansadutta: Before inflation runs wild, everyone takes his money and spends it on something tangible like land or gold. The basic principle of modern economy is just an agreement. The government agrees to recognize a piece of paper as having a certain value, but when the government and business no longer agree or want to play the game, then the system will collapse. Presently everyone is trying to exchange his money for gold, real estate or other tangibles, so the discrepancy between the actual gold stock and the value of paper money is becoming apparent. Paper money has no value, because the government has printed more promissory notes than there is gold in stock to back them up.
Guest: Switzerland has zero inflation, because it is based on the gold standard.
Hansadutta: Paper money was introduced for the purpose of cheating people. Why should the government substitute paper for gold? American Express says, "Give us your dollars, and we'll give you this cheque. Wherever you go, you can cash it at one of our branches." Srila Prabhupada said that actually what they are giving us is worthless—it is only worth something because they promise to pay us. It is another step removed from the actual gold substance, and in the meantime they are using our money to make money. The banks take our money and say, "Okay, we are going to give you 4% interest." We may think we are making money by giving them our money, but in the meantime they lend out our money and make 10-12% on it. Perhaps the fellow who borrows it will lend it to someone else. One day the whole thing will snap. Then, depending on what the government does, we shall see either inflation or depression.
Guest: The economists inflate 6-8% every year. They will keep putting more money into the economy until at last it reaches the point where the money will be worthless. Then no one will take any more money.
Hansadutta: I recall that when I was a child in Germany the government created a new money system three times, issuing new coins and new bills.
Sri Guru and Gauranga
Globalization in the Face of Disparity
It's Just Paper
Paper Currency is Cheating
World Community - Government, Economy, Politics
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