How does inflation create economic problems?
Inflation causes problems only for the rich, which is why the State and the bankers become hysterical at its growth. In Europe, as gold and silver began to flood into Spain as a result of their invasion and conquest of North America, it began to cause hyperinflation. People with useful skills — professionals and tradespeople — just increased their rates to keep pace with inflation. It was the wealthy aristocrats whose hoarded wealth became worthless overnight. It was as a direct result of this sitation that the monarchies of Europe began to fall, being replaced with democracy. Karl Marx outlines the mechanism of inflation in capitalist economies in his book, Das Kapital. Inflation occurs because capitalists must constantly increase the rate of production in order to exist, and this eventually results in a surplus of goods. As these goods pile up on shelves, they begin to devalue. The capitalists are then forced to destroy some of their production in order to allow the excess goods to
