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acroso
07-06-2008, 09:24 AM
I was looking at this civil war article that was talking about out of control inflation from the 1800's

http://www.tax.org/Museum/1861-1865.htm





By the spring of 1863, the crushing burden of inflation motivated Richmond to come up with an alternative to fiat money. In April, they followed the Union’s lead and enacted comprehensive legislation that included a progressive income tax, an 8 percent levy on certain goods held for sale, excise, and license duties, and a 10 percent profits tax on wholesalers. These provisions also included a 10 percent tax-in-kind on agricultural products. The latter burdened yeoman more than the progressive income tax encumbered urban salaried workers, since laborers could remit depreciated currency to meet their obligations. Adding to the inequity, the law exempted some of the most lucrative property owned by wealthy planters * their slaves * from assessment. Lawmakers considered a tax on slaves to be a direct tax, constitutionally permissible only after an apportionment on the basis of population. Since the war precluded any opportunity to count heads, they concluded that no direct tax was possible. Accumulating war debts and heightened condemnation of a "rich man’s war, poor man’s fight" led to revision of the tax law in February 1864, which suspended the requirement for a census-based apportionment of direct taxes and imposed a 5 percent levy on land and slaves. These changes came too late, however, to have any sustained impact on the Confederate war effort.

Without a Federal Reserve to print money, how is it they had so much inflation?

New gold?

forsmant
07-06-2008, 09:40 AM
Your answer is in the strong dollar thread.

Zippyjuan
07-06-2008, 11:07 AM
Gold for money does not prevent inflation. If you have ten ounces of gold to exchange for goods and the only goods you can buy are apples and this year there are ten apples, you can buy an apple for one ounce of gold. If the next year there are only five apples, then one apple will cost you two ounces. The amount of gold did not change but the price doubled. In the example, the taxes also drove up the costs of goods.

TastyWheat
07-06-2008, 11:37 AM
They also used fiat currency which can be just as bad as having a Federal Reserve. The Federal Reserve can't be controlled or held accountable.

IChooseLiberty
07-06-2008, 11:47 AM
Basically, throughout history, governments have used fiat money to fund excessive spending during times of war. This has happened at least twice in America with the continental dollar (revolutionary war) and the greenback (civil war).

It wasn't until recent history that the gov't has been able to install fiat permanently (although, when referenced in history, it'll most likely be temporary as well) throughout times of war and peace.

There are different types of inflation, as noted by a previous poster, including price inflation based on supply/demand fundamentals; But, when it comes to fiat, it's monetary inflation that is of most concern.