Forum Post: The Rich Rob Us Through Inflation!

The primary means of wealth transfer from the poor and middle class to the rich is through inflation which is caused directly by the Federal Reserve. When more money is created, it is cycled through the system and absorbed by those who control cash flow producing assets. These dollars are then reinvested at a rate above the rate of inflation.

At the same time, the increase in dollars circulating in the system causes prices for basic necessities to rise, including energy, gas prices, rent, food, clothing, etc. Most Americans spend a large percentage of their dollars on these necessities, and as such, the utilitarian value of this money is constantly being eroded in terms of its purchasing power.

The wealthy, conversely, can invest the preponderance of their dollars at a rate which exceeds the rate of inflation. As a result, they do not lose purchasing power on those dollars. Also, when more dollars are created, there is more money for them to absorb through their control of cash flow producing assets.

What is important to understand is that a dollar to someone who is working or middle class is significantly less valuable than it is to someone who is wealthy. Wages have been stagnant, but prices are rising. As a result, a bigger and bigger percentage of my paycheck must be disposed of in order to pay for basic necessities. Alternatively, the wealthy person is able to pay for their basic expenses with a relatively small portion of their overall income and the rest is reinvested at a rate which exceeds the inflation rate. This is what has led to the inequality and the phenomenon of the rich getting richer, while the rest of us are getting relatively less well off.

End the Fed