Peterson: Inflationism

William H. Peterson, Lundy Professor of Philosophy of Business at Campbell College, Buies Creek, North Carolina, writes of inflation:

. . . there is no subtler, no surer means of overturning the existing basis of Society than to debauch the currency. The process engages all the hidden forces of economic law on the side of destruction and does it in a manner which not one man in a million is able to diagnose.

So observed John Maynard Keynes, member of the British delegation to the Paris Peace Conference, in his book, The Economic Consequences of the Peace (1919). Within four years, a vicious hyper inflation had thoroughly debauched the mark, overturned the existing basis of German society and prepared the way for a Hitlerian Götterdämmerung.

Lord Keynes’ observation is not without irony. Later Keynes was himself to become enraptured with the idea of inflationism—to become, it would appear from the record, the most powerful if inadvertent ad­vocate of that creed in the Twen­tieth Century.

What is inflationism? I see it as a social mirage, the modern-day ver­sion of the ancient search for the philosopher’s stone that would transmute lead into gold (or “stone into bread,” as Keynes put it in 1943), the hope for a social per­petual motion machine, the wish come true of King Midas for all he touched to turn into gold (only to find he could then neither eat nor drink).

Inflationism, in today’s terms, is deficit-spending, deliberate credit expansion on a national scale, a public policy fallacy of monumental proportions, of creating too much money that chases too few goods. It rests on the “money illusion,” a widespread confusion between in­come as a flow of money and income as a flow of goods and services—a confusion between “money” and wealth.

Liberty Letters responds: I know, I know, they didn’t teach this in school, at least not in my experience. Not in high school, not in college, and not at the University level. And thanks to that undermining fact, how can anyone, even a conservative Republican, recognize that in the name of tax breaks the Bush Administration has been confiscating their money in ever larger amounts?

Self-education, my friends, this is the era when it is so very necessary – and thanks to the miracle of the Internet, easily available.

We invite you to visit here often, and send your kids here too, and ride along on our daily tour through the writings of America’s Founders, the writings of the men that influenced them, and some of the best thinking on liberty available in our era, as well.

As for political parties, don’t trust them. The great lie about tax cuts, even as these “conservative” Republicans back in the money (via borrowing) to feed Leviathan ever bigger portions, empowering him with ever greater powers, is a hint, a very strong hint, that it’s time for all of us to hit the books, pay attention to detail, and then do something about it. Forget partisanship. It’s partisanship that has dumbed us down and made us fit for the political slaughter.

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