Malkhaz Chikobava


The article analyzes the public spending of inflation and the reasons for its permanence. It is noted that inflation negatively affects the finances, monetary and the entire economic system. It reduces the purchasing ability of money, undermines the possibilities of economy regulation, structural transformation, restoration of distorted proportions, distorts the real picture of the financial results of production, the level of consumption of goods and service.

The article emphasizes that accompanying product of inflation as a complex phenomenon is massive and uncontrolled distribution of national income and public wealth: Inflation is directly reflected on the real income of households and firms and causes the distribution of wealth among the economic subjects. In addition, as a rule, the poor become even poorer, while the rich become richer. Consequently, inflation sharply strengthens social differentiation in society and exacerbating social conflicts. Overall, there are huge public expenditures, which are universally recognized.

The article shows that the need for permanent payment of interest leads to the concentration of increasing supply of money in money circulation, which does not participate in economic transactions and, therefore, in the creation of added value. Finally, the concentration of extra money in the economy leads to inflation.

According to the author, inflation, whose permanence is due to the necessity of paying interest, despite its size, is the disguised mechanism for distributing real wealth in favor of the financially wealthy people in any society.


Inflation, money, interest rate, seigniorage, open inflation, suppressed inflation, indirect taxes as disguised distribution of real wealth.


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