Inflation

The standard line among most economists is that deflation is as bad or even worse than inflation. In reality, the economy needs deflation now more than ever.

As the economy faulters, socialists are getting elected, promising free goods and services and an end to the chaos. Even when they make things worse, however, they will still gain political power.

As the economy falters, socialists are getting elected, promising free goods and services and an end to the chaos. Even when they make things worse, however, they will still gain political power.

Governments take valuable things like paper and minerals, stamp something on them, and call them money, in the process rendering these things almost worthless. Something is wrong with this picture.

Governments take valuable things like paper and minerals, stamp something on them, and call them money, in the process rendering these things almost worthless. Something is wrong with this picture.

Inflation is not neutral, it is a hidden tax, a distortion of entrepreneurial signals, and a corrosive force against social trust.

In Graham Moore’s The Wealth of Shadows, John Maynard Keynes is a hero for his monetary manipulations. However, in the real world, the economics of Keynes has brought economic ruin.

Some economists have claimed that “transparent” monetary policy in which the Fed operates predictably will lessen the chances of the boom and bust cycles happening. It isn’t the lack of transparency that creates business cycles; it is Fed-caused malinvestments.

If prices are instrumental in providing needed information to market participants, then inflation can be seen as introducing static into the system, creating more uncertainty and leading to bad choices.

Our own Jonathan Newman had the opportunity to sit down with a Federal Reserve governor. The central banker's answers to Newman's questions were evasive and riddled with contradictions. It seems there is not much behind the Fed's technocratic veneer.