Inflation: An Analogy

I was discussing today the nature of inflation, and thought of an analogy.

Imagine that you take your car to an airport parking garage every week. When you return from your trip, you take your ticket to the front, and they bring back your car. Now, imagine that the parking garage operators, in order to increase operating revenue without increasing prices, decides to return a lesser amount to customers when they come to exchange their ticket for their car. At the beginning of the week you bring in your 2010 Toyota Camry, and when you return, they give you back a 2009 model. A silly idea of course. The customers would rightly be up in arms and would flood the police agencies and courts with complaints. So why do we let the government get away with it when it comes to our money? Most people think that such a system is required for growth and that to return value for value would “limit the economy.” If it doesn’t make sense for parking garage operators (they’d certainly grow, but the rest of us would be the losers), then why does it make sense for the government and its banking system.

Ponder that!

Cory Nott

Chair, Libertarian Party of Contra Costa County

March 11, 2010. Uncategorized.