Missouri's 7th District, U.S. House of Representatives




Congressional Issues 2010

Congress should:
  • End inflation right now, this instant, once and for all by
  • acknowledging that government is the cause of inflation

“Inflation is the most insidious enemy of capitalism”
Richard Fisher, president and CEO of the Federal Reserve Bank of Dallas,
comparing U.S. monetary policy with that of “ancient Rome” and “today’s Zimbabwe.”

When most Americans hear the term "inflation," they think "rising prices."

"Inflation" is not "rising prices." Rising prices are caused by inflation, that is, by the inflation of the supply of money.

When the government inflates the supply of money, it causes prices to rise.

In a healthy, capitalistic economy, the price of everything is always going down. Computers are a good example: each year the price is lower and the speed is faster.

If the price of widgets is going up, it is likely that

  • the government has imposed regulations or restrictions on the production of widgets, causing fewer widgets to be sold, or
  • the government has created lots of new money, making the value of all money (new + old) lower, raising the "price" of widgets as expressed in money that is now worth less.

It is not merely that inflation breeds dishonesty in a nation. Inflation is itself a dishonest act on the part of government, and sets the example for private citizens. When modern governments inflate by increasing the paper-money supply, directly or indirectly, they do in principle what kings once did when they clipped coins. Diluting the money supply with paper is the moral equivalent of diluting the milk supply with water. Notwithstanding all the pious pretenses of governments that inflation is some evil visitation from without, inflation is practically always the result of deliberate governmental policy.
Henry Hazlitt, What You Should Know About Inflation

In an introduction to his notes on the Constitutional Convention's deliberations in Philadelphia, James Madison, the "Father of the Constitution," noted that one of the defects the Convention was assembled to remedy was that

In the internal administration of the States, a violation of contracts had become familiar, in the form of depreciated paper made a legal tender.

Accordingly, the U.S. Constitution prohibits paper money, or the emitting of "bills of credit." (Art. 1, § 10, ¶ 1) That provision reads:

"No State shall enter into any treaty, alliance, or confederation; grant letters of marque and reprisal; coin money; emit bills of credit; make any thing but gold and silver a legal tender in payment of debts; pass any bill of attainder, ex-post-facto law, or law impairing the obligation of contracts; or grant any title of nobility." ...

In Federalist Paper No. 44, possibly the most authoritative source for constitutional interpretation, Madison explained the provision:

The extension of the prohibition to bills of credit must give pleasure to every citizen, in proportion to his love of justice and his knowledge of the true springs of public prosperity. The loss which America has sustained since the peace, from the pestilent effects of paper money on the necessary confidence between man and man, on the necessary confidence in the public councils, on the industry and morals of the people, and on the character of republican government, constitutes an enormous debt against the States chargeable with this unadvised measure, which must long remain unsatisfied; or rather an accumulation of guilt, which can be expiated no otherwise than by a voluntary sacrifice on the altar of justice, of the power which has been the instrument of it. ... No one of these mischiefs is less incident to a power in the States to emit paper money, than to coin gold or silver. The power to make any thing but gold and silver a tender in payment of debts, is withdrawn from the States, on the same principle with that of issuing a paper currency.

A paper money economy is designed to foster a consumption mentality. No one saves for the future if they know the money will be worth less. People are inclined to go into debt, rather than to work, to get the things they want NOW, rather than defer gratification for some future-oriented purpose. Thus, corporations are able to capitalize quickly, without providing goods or services which are valued by people of good character, and they can depend on debtor-consumers to buy their goods with newly-printed money. Paper money is the antithesis of everything the Hebrew-Christian religion stands for.

Pro-Inflation Voices:

next: Abolish the Federal Reserve