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By Jon Coupal
Pinned on my office wall is a Zimbabwe $10,000,000,000,000 note. (That’s 10 trillion for those of you tired of counting zeroes). The currency is real, although Zimbabwe’s default currency is now the U.S. dollar. The central bank of Zimbabwe issued these $10T notes during the last days of hyperinflation in 2009, and they barely paid for a loaf of bread.
Ironically, you can now purchase one of these bills for about $27 U.S. dollars because they serve as collectors’ items or, more importantly, as a physical representation of the evils of inflation. Every economics professor in America should own one to show to their students on the first day of Econ 101.
Milton Friedman explained that inflation is always “a monetary phenomenon in the sense that it is and can be produced only by more rapid increase in the quantity of money than in output.”
Inflation hits everyone, but especially the middle class and those on fixed incomes. Inflation is a threat to the middle class because price increases reduce purchasing power so that the things that the middle class could previously afford are now out of reach. This pushes the lower rungs of the middle class out of the picture.
The disproportionate impact of inflation on the middle class relative to the wealthy may seem counterintuitive because the inflation rate — projected now at over 6% — is the same for everyone. But while all suffer the same rate of inflation, those with lower incomes tend to have lesser means of adapting to the increases in consumer prices. The suggestion from Biden’s White House chief of staff Ron Klain that inflation is a “high-class” problem is insulting.
To read the entire column, please click here.
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