[Ron Paul]
...what is the advice that you generally get, and that is inflate the currency. They don't say debase the currency, they don't say devalue the currency, they don't say cheat the people who are saved, they say lower the interest rates. The real deception is when we distort the value of money, when we create money out of thin air, we have no savings yet there's so called capitol, so my question boils down to this: how in the world can we expect to solve the problems of inflation - that is the increase in the supply of money - with more inflation?

Of course, it can't. The Fractional Reserve System of monetary expansion is inherently inflationary. For the act of expanding the money supply without there being a proportional expand of goods and services in the economy, will always debase a currency.

In fact, a quick glance at the historical values of the US dollars vs the money supply, reflects this point definitively, for the inverse relationship is obvious. One dollar in 1913 required 21 dollars and 60 cents in 2007, to match value. That is a 96% devaluation since the Federal Reserve came into existence.

Now, if this realty of inherent and perpetual inflation seems absurd and economically self-defeating,  hold that thought, for absurdity is an understatement in regard to how our financial system really operates. 

For, in our financial system, money is debt and debt is money. Here is a chart of the US money supply from 1950 to 2006. Here is a chart of the US national debt for the same period. How interesting it is that the trends are virtually the same, for the more money there is, the more debt there is, the more debt there is, the more money there is.

To put it a different way, every single dollar in your wallet is owed to somebody by somebody; for remember, the only way the money can come into existence is from loans. Therefore, if everyone in the country were able to pay off all debts, including the government, there would not be one dollar in circulation.