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Good evening Father Angelo,

I ask you a question that I have already tried to unravel without success. I have an Economics Degree and I’ve always been fascinated by economic theories, which I study in depth and write about. Nonetheless, there is a  topic which seems not to have  definitive answers and it is inflation. It’s a very specific economic concept, often misunderstood today mostly because of the many failing economic theories which find a great following both among academics and common people. Well, according to the “old school”, inflation was an increase in the amount of currency circulating in the economy. Up until one century ago, the healthy economic theory thought that it was a dishonest economic practice, as it should. Few people realize this, but increasing the quantity of circulating-money has many social consequences described as “Cantillon effect”: higher prices and therefore reduced purchasing power, structural polarization of wealth, depreciation of the currency, erosion of hard-earned savings etc.

Despite all of this, both common people and politicians accept inflation and even consider it a positive thing. I won’t list all the theories which argue this thesis. After a long research, I wasn’t able to find, in the Social Doctrine of the Church, documents which openly condemn this behavior which, in my opinion, is directly related to one of the four sins which cry to Heaven for vengeance (injustice to the wage earner). It’s a much more violent and subtle practice compared to a few centuries ago, because nowadays it only takes a few clicks to create new currency, whereas when currency was linked to the value of gold and silver to generate inflation wasn’t as easy as that . In some ways, some of our modern problems are actually related to this phenomenon, which has become institutionalized. Couples have to both work in order to provide for their children, with great expenditure of energy and time both for the couple and for the children; in order to buy a house, we need to take out very long term loans because our salaries don’t allow us to save enough to buy a house that, compared to some years ago, is a lot more expensive etc. I apologize for the length of my message, but it was hard to summarize such a complex topic in a few words.

I have  found in the social encyclicals some reference to the correct use of money and the danger of the concentration of wealth in a few hands, but I have not been able to find any document that addresses this issue directly. I thank you for the work you do with the amicidomenicani website.


I hope to hear from you soon.



Dear Marco,

First of all, I apologize for the delay in replying.

1. In the meantime, your family will have welcomed your third son, who will be a never-ending blessing for you all.

What you will receive from him will always be more than what you can give him, even though his care requires no little effort now.

2. Regarding the current financial system, your concerns are understandable.

Even though I have no expertise in this field, I’ve also asked myself how we can go on producing currency that isn’t backed by anything concrete, like gold as it used to be in the past.

3. Things changed in 1974 when president Nixon (United States) decreed that money shouldn’t simply be tied to the value of gold and, afterwards, in 1974, when he decided for the liberalization of capital movements.

But the liberalization of capital movements in itself is not something new in history.

What is new in the processes of economic globalization is the great importance of the financial markets.

This is what we call financialization of the economy, meaning the reduction of wealth to the exchange of currency.

In the past, contracts were used to allow the circulation of goods, today they aim to create financial products as well.

4. We can agree that: “It’s becoming more and more prominent in this unprecedented situation in which, for the most part, the capitals exchanged in the stock market have a fictitious value, because of the cross-ownership of shares and other expedients. The world seems to be enslaved to money that is backed only by another piece of paper with a governmental or private stamp. But the pseudo-capital has already seduced large sections of the population. It’s the seduction of a power stronger than power: appearance. Ghosts of paper, under the sign of which, the economic life becomes a place of illusion and, indeed, appearance.

We are dealing with a global economy that is no longer articulated mainly around the trade, for instance, of steel, cars or wheat. The financial markets are the subjects and the true propulsive force, or the cause, of sudden collapses of the economy…

In the electronic global economy, the managers who handle investment funds, banks and big multinationals, in addition to the money of millions of private investors, can transfer enormous capitals from one part of the world to another with one click of their mouse. By doing so, they take the risk of destabilizing apparently strong economies, which is what happened in East Asia” (Lorenzo Biagi, Per l’identificazione del fenomeno globalizzazione, in Rivista di teologia morale, 127 (3) luglio settembre 2000, p. 323).

5. The Magisterium of the Church has not commented on this option because, in itself, it’s not within its remit.

Paul VI in his encyclical Populorum progressio clearly stated that “The Church does not have technical revolutions to offer” (PP 87).

John Paul II in Sollicitudo rei socialis repeated the same concept: “The Church does not propose economic and political systems or programs, nor does she show preference for one or the other, provided that human dignity is properly respected and promoted, and provided she herself is allowed the room she needs to exercise her ministry in the world” (SRS 41).

6. In regards to the concrete options of the governments, the Church “takes into account the technical aspects of the problems but always in order to judge them from the moral point of view” (INSTRUCTION on CHRISTIAN FREEDOM and LIBERATION, 72).

So far, they haven’t intervened.

The Compendium of the Social Doctrine of the Church limits itself to generic expressions of exhortative and prudential nature.

Here’s what it says: “The more the worldwide economic-financial system reaches high levels of organizational and functional complexity, all the more priority must be given to the task of regulating these processes, directing them towards the goal of attaining the common good of the human family. There is the clear need not just for States but for the international community to take on this delicate chore with adequate and effective political and juridical instruments.

It is therefore indispensable that international economic and financial institutions should be able to identify the most appropriate institutional solutions and formulate the most suitable plans of action aimed at bringing about a change that, if it were to be passively accepted and simply left to itself, would otherwise produce a dramatic situation detrimental above all to the weakest and defenceless classes of the world’s population“ (n. 371).

This is what I can tell you.

I wish you well, I recommend you to the Lord and bless you.

Father Angelo