Suppose there are 1000 articles produced in a country. Suppose there are 1000 people in that country, and suppose there are 1000 currency notes in that country, and everybody has 1 rupee. Each article has the same price: 1 rupee each. And they trade among themselves.
Now, suppose the government in that country goes populist, and tries to make people rich by printing currency notes. It prints 1000 more currency notes of 1 rupee each, but production of articles is still same as before: 1000 articles. So everybody now has 2 rupees to buy the same number of articles. So every article will now go for 2 rupees each. That is what we say that things have become dearer, i.e., costlier. महंगाई आ गई। (वास्तव में रुपए का मूल्य गिरता है अगर वह आवश्यकता से अधिक छापा जाय। पहले एक वस्तु में एक रुपया मिलता था, अब दो रुपए मिलते है।)
Eventually the new currency notes reach everybody. And everybody has 2 rupees. But there is one intermediate stage, and that is where the real loot lies.
When a government prints new currency, it doesn’t give it to everybody at the same time. It releases it into market through payments to people closest to it: the government employees and the contractors who work for the government, and cronies who get loans from it. So, initially, government employees will have two rupees each, but others still have only 1 rupee each. So articles still cost 1 rupee each. So government employees get to buy two articles. As the new currency moves through the population, everybody gets the 1 rupee printed extra. But by the time the people last in the queue get the extra rupee, things have become costlier, that is, 1 article for 2 rupees, as I explained earlier. So the people last in the queue sold their production at 1 rupee each, but had to buy articles at 2 rupees each. So those who first got the extra currency got to buy two articles, and articles are the real wealth, whereas, the last people in queue, the farmers and labourers, still got only 1 article for their 2 rupees. In fact in the situation assumed initially, they will have only 2 rupees each, and no articles available to buy. So they wait for the next production cycle and buy articles at 2 rupees each. This is repeated in each cycle of currency printing. People last in the queue, farmers and labourers in villages, go without buying anything in each alternate year if the production has not increased, so their wealth halves each year.
So currency printing results into transfer of wealth from the poorest, farmers and labourers in villages, to the richest, government contractors, cronies, and government employees.
And to cap it all, as the new currency spreads into society as explained above, inflation happens, and to compensate for it, government grants Dearness Allowance (DA) to government employees, that is, increases their salaries. So they get double advantage: they get to buy cheaper, and also get salary raise. And so they soooo love Congress, which is playing this inflation game for last 70 years.
When you learn the Games Looters Play, you want to line up them all, and shoot them. But the thugs have guns, and an army of economic illiterates who will crush you without a bullet being fired. So you try to teach the dumbs some Economics. After all, if you can not run, you walk, if you can not walk, you crawl, but you never stop.
There must be some way to bring this House of Loot down. World can’t be that unjust and unfair.
(The example of 1000 currency notes and 1000 articles was taken merely to simplify the explanation. In the real world also, when a government prints extra currency, those who get it, are able to buy the articles in that economy at the old rates, but to whom the extra currency reaches the last, now have to buy the articles of that economy at the new rates, after the inflation. So they sold cheap, and had to buy costlier, because of extra currency printing. Inflation always results into this internal transfer of the wealth from the poorest to those close to government, the richest. This is the real evil consequence of inflation, which the economists who mostly come from the class which benefits from the extra currency printing, never reveal. And the Leftists thugs who cry “Disparity between the rich and the poor is increasing” either do not know, as they also do not know the economics, or carefully keep hidden, like the economists. But so long as extra currency printing continues, that is the inflation, the rich-poor disparity can only increase. In fact Modi, by his direct benefit transfers to the poorest, may have actually finally broken the vicious cycle.)
