Inflation is a policy

This is an opinion editorial by Rune Østgård. He is a lawyer, writer and the author of «Fraudcoin: 1000 Years with Inflation as a Policy».

John Maynard Keynes once wrote about inflation: «By this means the government may secretly and unobserved, confiscate the wealth of the people, and not one man in a million will detect the theft».

However, inflation is neither mystical nor is it complex. Once you know what to look for it’s very easy to understand. But for more than a century, citizens have been misled by economists, statisticians, and politicians. They successfully made people stare at prices. It drew the plebs’ attention away from the redistribution of wealth and the concentration of political and economic power that inflation always brings about.

If more people tried to find out how and when this policy started in the area where they live, it would be easier for them to understand the implications of inflation and why we need to end it. At least this was my hypothesis when I wrote the book Fraudcoin: 1000 Years with Inflation as a Policy. I traced the policy where I live, in the region of Trøndelag in the middle part of Norway, back to 1050 AD. At that time, it was the tyrant King Harald Hardråde who ruled Norway.

Hardråde had served as the commander of the Byzantine Varangian Guard in the East Roman Empire. He was based in Constantinople from 1034 AD to 1042 AD. In this period, he most likely learned how the emperor used inflation to gain political control over the masses and the rural areas in his vast empire. Shortly after Harald came to power in Norway, he killed Earl Einar Tambarskjelve, who was a powerful man in Trøndelag. He also killed Einar’s son Eindride. Collateral damage, I guess. Harald then imposed the death penalty on those who wouldn’t accept his coins, as he forced people to turn in their silver to his mints, in exchange for newly made coins.

The king set up mints in Trøndelag and the South-East of Norway, in the cities of Nidaros and Hamar. This was no coincidence, as he had little political support in these areas. Harald confiscated a share of the silver that the people handed over to the mint. He used this silver to produce coins that financed his political ambitions. Putting the freshly made coins into circulation in the cities where he had little power, made it easier for him to gain political control in these regions. I wouldn’t be surprised if he too told people that he had to “grease the wheels of the economy”.

And grease he did. Over the course of 16 years, Harald reduced the silver content of the coins from 90 to 33 percent. He could triple the money supply and increase his power and wealth accordingly. Prices probably tripled too. Labour and capital was sucked out of the rural areas and into the cities where Harald resided and spent most of his money.

In the year 1066 AD he tried to conquer England. He had somewhere between 7,000 and 9,000 soldiers at his disposal and they set course for London. King Harold Godwinson ambushed and slaughtered them in what has been known as the Battle of Stamford Bridge. This bloody end of Hardråde’s reign also marks the end of the Viking Age.

Today, banks create new money literally at the touch of a button when they grant loans. The system is based on credit expansion, and it is the same all over the world. The central banks coordinate the private banks’ money creation, with the governments’ blessing. The US Federal reserve acts as a global coordinator of the rest of the central banks.

The money supply was enormously inflated during the pandemic. Governments and central banks all over the world effectively abandoned the 2% CPI per year policy. Global debt growth was 70% in a two-year period. The Fed expanded the money supply by 40%. The US money supply actually tripled during the past 15 years as the Fed narrowly outperformed Hardråde.

The expansion of the money supply during the pandemic enabled a redistribution of wealth of historic proportions. The wealth of the one-percenters in the United States increased by more than 33%. At the end of 2021, the one-percenters owned 32.3% of Americans’ assets.

Policymakers knew that prices could spiral out of control. And that is exactly what happened this year. Double digit price inflation in many western countries, and hyperinflation several places. Followed by a historic collapse in the real estate markets.

Russia also expanded their money supply during the pandemic, by about 30%. Inflation often ends in bloody campaigns and the proxy war in Ukraine between the US and Russia shouldn’t be a surprise to anybody.

I wonder if the two presidents are interested in economic history. They should be. In 1520 the warmongering, inflationist King Charles XII of Sweden was decisively defeated by the Russian army at the Battle of Poltava in Ukraine. The world’s first central bank, Riksens Ständers Bank, had financed his numerous campaigns with the paper money. When people heard that he had lost the war, they ran to the banks. The clerks closed the doors, knowing full well that it had always been a Ponzi scheme. Bankruptcies and poverty followed.

Inflation = Expansion of the money supply –> riches for the rich –> Kings and Presidents with inflated egos –> bloody wars –> price inflation –> death and poverty. Simple as that.

And now we see the political endgame: full panic. The EU has simply implemented price caps on oil. Have they lost their mind? Are they longing for a new bank run?

Christine Lagarde, who heads the European Central Bank, recently told Irish TV viewers that “the inflation pretty much came from nowhere”. Does she think that’ll stem the tide? Is she stupid or something?

I don’t know the answer to that.

But I know for a fact that inflation is and always has been a policy.

Let’s end this madness.