In the first part of this two-part series on inflation and deflation we discussed how money came to be used to facilitate trade. Metals were the best commodities for use as money because they were durable, relatively rare, and were easy to mold into identical pieces. As the wealth of people grew, however, they’re store of metals came to be heavy and difficult to secure. For this reason people came to rely on specialists to whom they would entrust their gold for a fee. In return they were given a paper receipt showing that they were entitled to retrieve a certain amount of gold from the vault. For the sake of clarity we’ll call this type of specialist a “deposit banker.” If you wanted to pay someone in gold, you would simply give them your receipts for the gold in your deposit banker’s vault. In this way, paper eventually traded as if it were the gold itself. Continued…

It sounds strange to a lot of people that both deflation and inflation are being talked about right now as if they could possibly happen at the same time. If inflation is rising prices, and deflation is falling prices, how could they happen at the same time? In fact, there are two distict meanings for the terms “inflation” and “deflation” which are often confused and interchanged, one that is common to the average person, a general rise or fall in the level of prices, and one that is more often used by economists, a rise or fall in the amount of money in circulation. Generally the latter leads to the former, but this is not always the case. For this reason we are going to be strict with the usage of these terms in this article. We will always mean a rise or fall in the level of money in circulation.

The method of inflation in the modern world is a complicated process, but we can simplify it dramatically for the purposes of understanding it. To understand what inflation is, you must first understand what MONEY is. That might seem simple, money is the green stuff you buy your bread with, right? Yes, of course. But how it got that way is not so apparent and because of that many people take it for granted without ever understanding it conceptually. Continued…

You do not have a RIGHT to medical treatment. That’s right, you heard me. You do not have a RIGHT to medical treatment, PERIOD.  Let that sink in a bit.  We’ll come back to it.

Now, there is a whole lot wrong with socialized medicine. Economically, of course it is a disaster. However, the economics of it can be somewhat difficult for the average person to understand, so I’m going to start with the more fundamental reason why socialized medicine is in the words of my old biology teacher “WRONG! WRONG! WRONG!”.

Unfortunately, public education teaches us next to nothing about those subjects that are the most important for our survival in a civilized society. Philosophy (ethics, politics) are taboo in school (and also at work), economics is not taught at all (not even how to balance a checkbook), history is not taught or is made so boring as to torture the students.  The problems with socialized medicine (really socialized anything-at-all) are related to two of these taboo areas – philosophy (politics) and economics. History would also teach us that socialized anything-at-all is a complete failure, but that would be a statistical analysis and we can do better than that. Philosophy and economics will provide the answer a priori, i.e., solely through logic.

Politics is the study of the best way to live with other people. If you want to live only by yourself, you do not need to study politics (but you would need to study ethics.) Some great thinkers have done a lot of the work for us with regard to how best to live with other people. They have discovered a concept called “rights.” Rights are a negative concept. That means that you have a right to be left alone, not a right to be taken care of. (One way to remember this is to realize that everyone has the same rights. If we all had a right to be taken care of, who would provide the care? If it turned out to be you, what about your right to be taken care of?) Rights are not granted by Washington. They are not granted by anyone, period. Rights are an idea, a concept, that one must follow if one wishes to live in a civilized society.  They are not someone’s opinion. They are not granted by majority rule and they cannot be taken away by majority rule or any other rule. They are absolute. I know, this sounds crazy. Bear with me. Continued…

I’ve decided to start a new category called “The Basics.” When someone asks me a question that is basic to the libertarian political philosophy, to objectivist ethics, or economic principles, I’m going to try to write an article that answers their question and post it here online for those who are new to the subject.

I will never forget the day I realized that I was completely ignorant of economic principles. Money was a foggy undefined concept to me and yet I used the stuff every day to survive. I desperately needed the basics. I found them because a talented writer named Henry Hazlitt wrote a book called Economics in One Lesson. If you are new to economics and libertarian politics, I very much recommend you pick up a copy of this book. Just click the link to buy a copy from Amazon.

We all had to start somewhere. Maybe something I write will inspire others, too.