Governments will use inflation to circumnavigate directly taking the citizens’ money. Governments print more money, effectively resulting in a hidden tax - one that least hurts the wealthy because more of their money will be in stocks, real estate, and tangible assets - the value of which rises with inflation.

Money circulates faster, driven by the lack of confidence in the currency. The doubling of money in the nation’s economy has the effect of more than doubling prices. As people frantically spend their increasingly worthless money, prices rise even faster. The faster circulation of money has the same impact as if there was more money: with the real presence of more money and the apparent existence of even more than that, there is a runaway chain effect. The diminished purchasing power of customers suppresses the production of goods.

Deflation has negative consequences for those with fixed costs, such as debt and employees’ salaries. Money’s increased worth increases the relative cost of debt. Payments subsequently cannot be made, people lose their jobs, and banks fail. The tendency of citizens to hold onto money exacerbates deflation because the decrease in circulation reverberates in the economy the same as if there had been less money.