"By a continuing process of inflation, government can confiscate, secretly and unobserved, an important part of the wealth of their citizens"
- John Maynard Keynes
About this Quote
In this quote, John Maynard Keynes is discussing the idea of inflation and its impact on individual wealth within an economy. Inflation refers to the basic increase in costs and the ensuing decline in the buying power of money with time. Keynes asserts that through inflation, governments can successfully take a portion of the wealth held by citizens in a way that might be neither overt nor immediately apparent.
The phrase "continuing procedure of inflation" suggests a sustained and ongoing increase in cost levels instead of a short-term, sporadic change. Such consistent inflation erodes the worth of cash, implying that the same amount of cash purchases fewer items and services than previously. In this context, Keynes uses the term "take" to explain how inflation can lower the real wealth of individuals. When money loses its purchasing power, those who hold money or fixed-income financial investments see a diminution in their genuine wealth as they can afford less with their funds than previously.
Keynes explains this process as occurring "covertly and unnoticed," indicating that individuals may not instantly recognize the loss of value and wealth since inflation is not a direct tax or overt seizure of possessions. Instead, it's a progressive and subtle decrease of wealth's value that gradually can considerably impact savings and financial security, specifically if salaries do not increase at the same speed as inflation.
Governments might have different motivations for allowing or perhaps motivating inflation. For instance, inflation can decrease the genuine problem of public debt, as future interest payments are made with money that deserves less than when the financial obligation was initially sustained. Nevertheless, while potentially alleviating financial pressures on governments, persistent inflation without corresponding wage growth can be detrimental to residents, particularly those on repaired incomes, ultimately causing a disparity in income and wealth circulation.
In general, the quote highlights Keynes's crucial view of inflation as a tool that can lessen specific wealth, posturing difficulties for economic stability and fairness.
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