With political sewage threatening to reach tsunami force, writing an article on inflation seems like posting a daydream. Yet a better understanding of money would show us how it could shield us from political as well as economic malfeasance.
When we hear inflation discussed it’s usually presented as a method of price control. It’s a lever central bank ‘policymakers” tweak to keep IT from happening, by which I mean the infamous Bernanke IT, i.e. deflation, i.e., a general fall in prices. The Fed and its cheerleaders believe a 2% CPI inflation target (more or less) is perfect for a healthy economy. But horrors – it’s been below 2%! A recent article in the Economist exhorts the Fed to get on the stick and get busying printing (‘The only thing we have to fear is fear of inflation“).
It has been reckless of the Fed to allow inflation to remain so low for so long. We should be cheering the slight, recent acceleration in prices and hoping for more.
Remember, in the world of Keynesian economics, savings are bad, capital should be free, and in the long run we’re all dead. (See Ray Kurzweil for a rebuttal of this last point. Or see Henry Hazlitt.) In the real world where some people work for a living things are a little different.
First, as its advocates are loath to acknowledge, inflation targeting assumes a currency that, through the coercive mechanism of government, has been taken out of users’s hands, placed in the custody of a banking cartel, and converted to digital fiat money for instant manipulation. We almost never read any hint that money might be otherwise than digits created by a committee of political insiders crafting ‘policy.’ We almost never read that the crafting is indistinguishable from counterfeiting. We almost never read that money developed as a means of overcoming the restrictions of direct exchange, where one commodity emerged as the most sought-after in trade, which was neither digits nor paper. We almost never hear that when paper money becomes money itself it is always a result of government imposition overriding the choice of market participants, i.e., anyone not in on the scheme.
This post was published at GoldSeek on 31 October 2016.