The political monetary system inevitably trends toward political centralization. The reason for this is that the central government denies to the several states participation in the monetary system, reserving to itself a monopoly of the issue power. By resort to this power, it is enabled to practice paternalism, and thus it draws to itself supplicants and pressure groups that the states are powerless to serve. In exchange for its grants and largess, the central government gains the fealty of its beneficiaries and thus undermines the prestige of local governments. It seems all-powerful because of its apparent ability to create riches by creating money, which is actually dilution of the money supply and which manifests in inflation, the cause of which the people do not understand. The state and local governments, on the other hand, must collect their taxes the hard and obvious way. Hence they are limited in their expenditures and thus in their power. In this way, the central government builds up a vast bureaucracy that reaches into the jurisdictions of state and local governments and harasses their citizens with regulations that discourage the spirit of enterprise and dull the sense of freedom.