Inflation’s Hidden Toll: How Money Printing Strains Families

Inflation.

This word strikes fear among most readers. Thoughts of grocery bills and gas prices might be what the average American attaches to this word.

However, price increases are not inflation itself. Rather, they are a consequence of inflation. Inflation simply means an artificial increase in the money supply. In today’s world, an increase in the money supply is generally caused by central banks “printing” more money.

This is exacerbated in our current fiat system, whereby governments are not limited by a stock of a commodity, say, gold. 

Inflation is an “economics” word, but one that has real-life consequences, including its effects on many Americans’ ability to start a family.

Planning is an essential element in any family. How much should be saved, if and when to have children, how much to put away for college, when to retire, and even what will be bought at the grocery store, are all questions individuals must answer when preparing for the future.

This planning helps make the future more certain. However, inflation distorts one's ability to do this. Because rising prices due to inflation are often unpredictable, inflation destroys people’s ability to plan for the future.

In fact, inflation destroys the ability to economically calculate profits and losses. Or, as Ludwig von Mises writes, “By destroying the basis of reckoning values…inflation shakes the system of calculations in terms of money.”

With inflation, the value of every dollar decreases. This means that each dollar saved is worth less. 

Through the Cantillon effect, the real income of the vast majority of parents is reduced, and they are forced to live with a lower standard of living or work more. If parents work more, less time is spent with their spouse and/or children. If they do not, the overall quality of life is lessened. 

Inflation, too, tends to make people more present-oriented. Because the value of money is constantly falling, people are incentivized to spend more in the present.

Naturally, this means that less money will be saved for the future. Not only does inflation make planning more difficult, but it also creates incentives for individuals to save less - a vicious cycle. 

This has obvious societal consequences as well. Due to inflation, the psychological and monetary costs of having a family increase.

The capital needed to provide for and have children becomes more expensive in an inflationary environment. Additionally, because parents are forced to decide to live more frugally or to work more, the amount and quality of time spent between parents and children diminishes.

For example, rather than watching their child’s ball game, parents have to work overtime to pay the bills. Parents realize these costs, and for some who are thinking about having children, the expected benefit is diminished. With the increased cost of raising children, people might forgo having a child at all!

Inflation also harms the relationship between spouses and makes getting married more costly. The process of dating and courtship, the way in which most Western marriages are formed, becomes more costly.

Economist Jeffery Degner notes that inflation “leads to a decrease in the time spent on leisure and household production, leading to relational tension and conflict.” Naturally, this can lead to divorce. 

It is important to remember that the saying “more money, more problems” applies to central banks, too. As governments engage in inflation, prices tend to rise.

While this may seem disconnected from everyday life, the tentacles of monetary policy really do reach into every facet of society. Rather than being insulated from inflation, the family unit - mothers and fathers, sisters and brothers, and their relationships with each other - is deeply affected by it.

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