Reason prints Steve Chapman’s column calling for more inflation. Salvation through paper money!
Source link: http://archive.mises.org/9141/the-case-for-inflation/
The Case for Inflation
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Mark Thornton cannot be an Austrian because these are the ramblings of a devout Keynesian.
Dabble in withcraft if you wish but just because the Fed has more experience in dealing with inflation is no reason to go there voluntarily.
The US economy is broken and will need time to repair. Just like the UK economy it has placed too much reliance on debt secured by house prices. Money for nothing.
It will be easier and safer to let the economy adjust and find new things to do rather than to let the genie of inflation out of the bottle.
Clearly the politicians and their advisers are responding positively to the prospect of spending their way out of a recession, but they would, wouldn’t they?
Turning the economy around in the way suggested will do about the same as bailing out the auto industry. It will delay a recovery and have a devestating effect on future investment decisions.
Hey…its Chapman that is the Keynesian, not me.
Haha, my heart jumped as well when I saw this title with your name on it. You really shouldn’t do that to us, Mark. I thought we might have lost you!
On a side note, I’m getting really good at explaining the business cycle. This was my one-sentence comment to the article you provided us with:
“Unfortunately, we don’t have a choice in whether or not we experience a recession, as a recession is the necessary correction of mal-investment, which, being induced by a central bank’s artificial manipulation of the interest rate via monetary inflation, cannot be avoided but only prolonged by additional monetary inflation, as this would only exacerbate the mal-investment.”
My apologies, you really had me scared there.
As a serial reader of both Keynes and Mises I had to scroll to the top of the page to see whose website I was reading.
Relief, Mises had not converted and left me alone
It is funny, how the author and the article contradicts itself: for example, it is mentioned, that ” The best part of inflation is that it avoids the need for the government to embrace vast spending initiatives ” – are we really avoiding, at the moment, government spending, when two weeks earlier the Fed and State had already issued 8,5 trillions (by now it should be bigger) with rescue funds to various institutions; thus inflation is a monetary expansion of uncovered money – witch usually only the Fed and Government – the monopolies of the mint – can do. Then it is mentioned, that ” But if the crisis stems from declining real estate values, why not stop them from declining? ” – in reality, the crisis wasnt caused by the falling crises, as it already had been caused, when the prices were going beyond the equilibrium price of sound money – then the malinvestment occured. Then the author thinks, that the rising prices would stimulate the economy – i would say (though it is still debatable), that maybe in the short run it would, but this would only serve as a function for further bad investment, and such malinvestmemnt, as usual, would cause another recession – but this time, i believe, such recession would be longer, as the current recession wasnt fully finished and cleared.
The real problem is the diagnosis is being given by a charlatan. That is why the cancer Chapman identifies (“But when you have cancer, the one thing scarier than the cure is the disease.”) is incorrect. It is the misdiagnosis of a quack!
Growth Of Government Is The Cancer!
Tumors grow even if the rest of the body is in decline. In fact the growth of tumors is the cause of the decline!
I do not know anyone who celebrates the appearance and the spread of cancer, do you?
As we assess treatment we can decide to remove one tumor at a time which would be like exposing Krugman or Bernanke or any of the plethora of ego-driven interventionists as charlatans.
Or we can go to the source of the cancer and remove it and follow up with some treatment that purges all remnants. The source of the cancer in America (and subsequently in the world since the dollar is being used currently as the world reserve currency) is the unConstitutional coup. We need to surgically remove this tumor by exposing the membership of the inner circle of the unConstitutional coup and subjecting them to the wrath of the people of the world who have been torn by wars and victimized by their puppet tyrants for generations now.
The re-education of humanity about the principles of classical liberalism will further cleanse the system of the disease of socialism, fascism, and empirical economics.
Once cured the organic whole will stabilize as classical liberalism societies begin to pop up and flourish, leading to a classical liberalism civilization and a prosperity that is our birthright.
I hope all is well with everyone. Why do we think inflation is good? I do not understand. How is spending more money a good thing? Is this not how we got into this mess in the first place.
Inflation simply steals from people who have made the choice to save rather than to spend. Storing present value for future use. The Federal reserve can not have any of that, that apparently is a terrible thing, and we should all live paycheck to paycheck, spending all of our money as soon as we get it, even before we get it. That way, aggregate demand will be precived as being higher. This will lead to higher investment by individuals! This is great right! Unfortunately when inflation is tamed and people no longer want to spend as much money as they were before all of that investment that was to cater to the false demand curve created by inflation will no longer be profitable. (strange huh) and then we will have a bust.
So in order to keep this charade going the fed must spratically increase and decrease inflation. the only problem with this is that makes correct economic calculation nearly impossible because it is more difficult to predice the value scales of consumers. (the irony)
Apparently we are all sheep, according to the federal reserve and are incappable of making decisions based on anything except what they are telling us to do that any given moment.
Get rid of the fed, lets have real money. I dont like my savings account being raped for 4% every year. Its like a tax, on doing the right thing. Basically just like everything else the goverment does, it punishes those who do well and then helps the unproductive people. YEAH!!!!!!
“Inflation simply steals from people who have made the choice to save rather than to spend.”
what do you mean by save? a savings account? does a savings account create more dollars (inflation?) for a period of time than saving existing dollars in a jar???
if the new inflation goes into a process that raises the price of iron 20 dollars per ton but reduces the price of food for everyone by 15 percent…overall reducing monthly or yearly outlays would that be stealing?
has such ever happened??
when money enters a barter economy is that inflation??? is that bad??
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