To see that, it is not necessary to conduct relevant research cooperation between individuals and groups not only means many opportunities and benefits, but there is also a chance of conflict. This interpersonal conflict intensifies when hegemony and state intervention disrupt peaceful cooperation and create a caste system in which people are classified by the state based on privilege. Caste analysis, which has a very strong tradition in libertarianism, points out that the state distinguishes between people by distinguishing between the net tax-paying caste and the net tax-receiving caste, that is, who pays the taxes and who consumes them.
A peaceful and cooperative production and exchange mechanism fundamentally enriches everyone. However, after state intervention, some people benefit at the expense of others. This not only strengthens the political caste, but also teaches people to try to take control of the state apparatus to benefit at the expense of others, rather than enriching themselves through production and exchange. Particularly in democracies, this destructive tendency encourages everyone to compete for short-term, temporary benefits, undermining others in this competition.. In this situation, members of different demographic classes begin to resent each other and blame each other for the disrupted economic conditions. Of course, the state elite benefits from people’s ‘castes’ blaming each other, so they turn to the state to solve the problem.
The state elite acquires more money and power, while net tax consumers continue to benefit, and net taxpayers continue to struggle. Everyone knows something is wrong, but people don’t know what to do. That’s why they always turn to politics for a solution, but this only creates the problem. This is clearly visible, for example, in the relationship between older people and young people in present-day Hungary.
The damaging effects of inflation on the structure of society
According to the Cantillon effect, the introduction of new money into the economy has an unequal price and wealth distribution effect, i.e. those who get it first will do the best and there will be people who are ultimately left out. Inflation does not raise prices evenly and does not affect everyone equally, otherwise inflation as a practice and policy would be meaningless. As long as there is inflation, there is a reallocation of income and wealth between social groups. The result is that a new distribution of wealth and income emerges in the economic system, and in this new social order the needs of individuals are met in a different way than before. Inflationary monetary policy leads to the institutionalization of the debt culture, growing class differences and corruption risks and tensions.
Guido Hülsmann, an economist of German descent and one of the prominent representatives of the Austrian school of economics, examined the cultural effects of inflation and pointed out that inflation has different effects on different generations, and its consequences are the dissatisfaction that develops among them. In a persistent inflationary environment, perishable goods change hands cheaply, while durable goods change hands at an additional cost. What are the most durable goods? Real estate and financial securities. What are the most perishable goods? What is the most perishable good? Human work. Human labor cannot be stored for a second. As a result, in an inflationary environment, labor changes hands more and more cheaply than durable goods such as real estate or financial securities. And this is reflected in the fact that the young generation is experiencing increasing difficulties in accumulating wealth. They need many more years of work and higher savings rates to catch up to the level of prosperity that previous generations amassed in less time and at lower savings rates.
So, as counterintuitive as the assumption may be, today’s youth have a harder time. There has always been some resentment between older and younger generations, and much of that is natural, or at least historically the norm. However, when we add to this the intergenerational transfers of wealth and inflation, as well as a legal caste system that privileges some and burdens others, there is a reason why there is serious intergenerational opposition. Much of the resentment, especially among the elderly and young, centers around those who can largely afford what they want in life, and those who cannot.
Thus, any attempt by the older generation or those who had the opportunity to purchase certain goods when they were still affordable to provide financial advice to the younger generation is met with disdain. The elderly view the young as privileged because they have grown up with modern means and follow destructive political and economic ideologies, and are ungrateful for rejecting the advice of age and experience. But the categories are not static: most elderly people start out as net taxpayers and become net tax consumers at the end of their lives. This is not just the creates a contrast between generationsbut also encourages the older generation to use the state apparatus to maintain their net tax consumer caste, while the younger generation uses the state apparatus to join the net tax consumer caste.
Overall, inflation not only causes higher prices and distortions in the production structure, but also destroys the moral and economic fabric that would make intergenerational cooperation possible. So inflation not only causes the destruction of wealth, but also teaches bad moral lessons: it rewards short-termism and risky behavior instead of patience and frugality. On the other hand, Bitcoin and other cryptos offer people the opportunity to preserve their wealth despite inflation, independent of government intervention, and are not under central supervision. Young people can save with the help of cryptocurrencies in such a way that the value is not distorted and everyone has access to it, regardless of country or monetary policy.
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