A few days ago, the television screen became the stage for a technical absurdity that bordered on the immoral: "Why is it bad to have low inflation?".
This is how a journalistic segment on Telemundo was presented a couple of days ago. The journalist went on to say that "the question is fine," adding that "low inflation has consequences," which is why the BCU seeks to set it at 4.5% per year.
Since it is currently at 3.6%, there is concern that it may fall below that number. She added that "Low inflation combined with an economy that grows more slowly is as uncomfortable as putting on a wool sweater without a T-jersey underneath, it is not the ideal scenario, there is a risk of lower consumption, lower investment, less work, and less growth."
This would bring "Problems in the labor market, if inflation shrinks, real wages go up, but for companies it is a higher unforeseen cost that can affect employment. And public accounts, with lower inflation, revenue is lower and expenditures end up being higher, that is, red numbers everywhere," to finish off the report with the climax of absurdity: "low inflation is not always good news."
However, let us go step by step in order to be clear and expose the ignorance, bad faith, or the errand behind this report, made up as "journalistic."
What is inflation? It is the increase in the amount of money that is offered in the market that causes the decrease in purchasing power. It IS NOT the generalized rise in prices, as is mistakenly (and at this stage of civilization I believe also intentionally) insisted on by operators who are aligned with interventionism.
Money, like any other good, is governed by supply and demand, that is, as its quantity increases, the price falls and vice versa.
Inflation causes prices to rise because now there is more money chasing the same goods. The price increase is the symptom, not the cause.
Who has the monopoly on printing money? You guessed it, the state, through the Central Bank. Inflation is therefore a fact, a political decision. It is intentional. It is something desired by politicians, even if they dress in different clothes.
Contrary to what the journalistic piece mentions, inflation is never, at no time and under no circumstance, good. Never.
Why is inflation disastrous? Simply because it steals purchasing power from people's wages. Whoever has fixed monthly income suffers from inflation because his or her money is worth less and less. However, inflation also undermines investment, since it previously undermines saving.
Since money is worth less and less, people can't save, because the currency in which they could save loses its value; and it is precisely saving that is the prior condition for investment to exist. Investment is what will generate the increase in capital in a society that will ultimately generate greater production and a higher level of wages.
For this reason, stating that "Low inflation combined with an economy that grows more slowly is uncomfortable, it is not the ideal scenario,..." is a sovereign absurdity.
Now, if it is harmful, why are there those who claim that "low inflation is not always good news"? It is because some people benefit from inflation. Who? Those who had the opportunity to spend the printed money before the rest, because since the effects of printing are not immediate, that money has greater purchasing power at the beginning.
By the time the money reaches the last recipients, it is already too late, since the phenomenon of printing, by increasing the circulating money supply, caused prices to rise and therefore money to be worth less, that is, I have less purchasing power.
Inflation is a business for politicians, who resort to it to finance public spending, being able to finance it before the money depreciates, at the expense of workers, those whom they claim to protect. It is therefore a hidden tax. With issuance they kick the can down the road, trying to make the bomb explode on whoever comes after.
Inflation is so harmful that the Nazis, during the Second World War, devised between 1940 and 1942 "Operation Bernhard," which consisted of counterfeiting British currency in order to circulate it in British territory, thereby destroying its economy.
The scheme was discovered by chance by the British government as a result of the discovery of a counterfeit bill that had the number of an authentic one that had been withdrawn. It is estimated that the counterfeit money that circulated in England amounted to 15% of the total money in circulation.
In other words, inflation was used as a weapon of war. Meanwhile, around here we have to put up with being told that low inflation is not always good.
They are immoral and ill-born. Inflation should be classified as a crime, as a variant of fraud. (On this subject, and for anyone interested in the topic, I recommend Ricardo Manuel Rojas's book "Inflation as a Crime").
Money doesn't create wealth. Wealth is created through production, which is what determines that there are more goods and services to offer. However, when the economy doesn't grow, there are no more things to offer, so the appearance of money causes there to be more demand for the same goods and services, which determines that their prices increase.
However, the fault doesn't lie with the merchant or the entrepreneur, but with the politician, who made the decision to put more money into circulation without any backing. This is why inflation, whether 3.6, 4.5, or 6%, is always THEFT.
Let us not be deceived by the siren songs of politicians and their accomplices.
