The City Journal runs a wonderful piece on inflation’s moral cost by Theodore Dalrymple:
But asset inflation–ultimately, the debasement of the currency–as the principal source of wealth corrodes the character of people. It not only undermines the traditional bourgeois virtues but makes them ridiculous and even reverses them. Prudence becomes imprudence, thrift becomes improvidence, sobriety becomes mean-spiritedness, modesty becomes lack of ambition, self-control becomes betrayal of the inner self, patience becomes lack of foresight, steadiness becomes inflexibility: all that was wisdom becomes foolishness. And circumstances force almost everyone to join in the dance.
His thesis reminds me of this piece by Hulsmann.
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And at the end of this process, peace becomes WAR !
You have the rat race where you earn a living trying to strike it rich and you have the rat dance where you are forced out of peace and forced to make complex contorsions just to keep your wealth and protect it against inflation.
That’s why I don’t save money, I invest it in the stock market, that way if the dollar crashes and they start a new currency, my stocks will still be worth something.
But inflation forces people to dump their money ahead of time and this accelerates inflation.
Inflation is like global warming, it reaches a point where it feeds on itself and where it can’t be stopped.
Yes, an excellent essay from City Journal. Happened to find that one in my Twitter stream just the other day & marked it as a must read.
Thanks, Doug, for the link to Hulsmann’s piece. Should make for an interesting complement to this City Journal article.
The problem with inflation is that there is no way out of losing money.
If you save money, you will lose wealth. You are forced to risk your money into the stock market to make up for the lost of wealth due to inflation.
The higher the inflation, the riskier your investment needs to be to make up for that inflation.
Inflation forces people to buy now, borrow now or take unwanted risks in the stock market.
Everybody knows that bonds don’t pay up enough interests to make up for inflation and neither do TIPS.
Don’t trust the government to make up for their inflation on their own bonds.
TIPS = Totally Inflated Pieces of Shit !
Actually, the reason you can’t protect yourself against inflation is because of the steady supply of idiots willing to buy bonds at absurdly high prices.
Once they cut it out, your savings can actually keep up with inflation.
But don’t hold your breath.
Thomas Mann has a really good short story on the moral degradation of inflation in 1925 called “Disorder and Early Sorrow”. It’s really fascinating reading.
We will soon face some pretty high inflation, so get ready for it. It may destroy the nation’s morals, but you shouldn’t let it destroy your finances. Borrow money to buy assets that are likely to appreciate. I still think the stock market is a good bet because much of the new money will go into it. I think monetary pumping is largely responsible for the market’s recovery to date because profits certainly haven’t driven it.
See this? http://www.wneg32.tv/index.php?option=com_content&view=article&id=1490:surveillance-video-shows-moments-before-shooting&catid=1:latest-news&Itemid=18
See this from yesterday…. http://www.wneg32.tv/index.php?option=com_content&view=article&id=1490:surveillance-video-shows-moments-before-shooting&catid=1:latest-news&Itemid=18
Theodore Dalrymple is a favorite writer of mine and a world-class psychoanalyst of the various species of Boobus. It’s great to see his work profiled here at Mises.org. I highly recommend his books, especially Life at the Bottom, for a bracing review of the immense cultural momentum against freedom and responsibility within the Anglosphere.
He has also written on many other neglected praxeological subjects, such as cultural obstacles to capital accumulation in Sub-Saharan Africa (hint: property claims at the family or tribe, rather than individual, level).
Doug, et al., in addition to this piece, and Guido’s, you might also find of interest Paul Cantor’s excellent piece about how inflation undermines the entire fabric of society with terrible policies and constant rule-changing on a whim: Hyperinflation and Hyperreality: Thomas Mann in Light of Austrian Economics.
under inflation, ersatz trounces real. i’m already seeing fat substitution in supermarket products (olive to canola oil etc.). packaging getting bigger, while content weight shrinks.
that’s what i hate even more than rising prices, degradation of products to save collapsing margins.
Gold: protecting against inflation since ~550 BC
Fundamentalist,
“Borrow money to buy assets that are likely to appreciate.”
Isn’t that how this current crisis all started up ?
In awe of Doctor Dalrymple’s analysis which explicates starkly what I have tacitly & implicitly internalized about inflation since I definitely learnt of it & its inevitable pernicious consequences @35 years ago in junior high school– in the teeth of the arrant nonsense my socialist pseudo science teachers spouted! Inflation in my considered opinion is for the reasons Doctor Dalrymple cited the immediate concrete cause of the worst unmerited impersonally inflicted mass peace time suffering in the developed world– & is eminently preventable.
USA Today: “Isn’t that how this current crisis all started up ?”
Exactly! But as Mann’s short story emphasizes, those who cling to the old ideas of savings and frugality get crushed under the flood of new money. If the guv decides to deluge the country with paper money, we have two choices: cling to the old virtues and drown, or surf.
However, there should be a difference between Austrians surfers and other surfers. We should know that the wave can’t last forever and be prepared to turn on a dime and embrace the old virtues once again. When the wave crashes, non-Austrians who made their fortunes surfing will be ground into the ocean floor if they don’t get off the wave in time; they’ll join those who tried to maintain their ideological virginity during the boom and got crushed by the wave.
Timing is everything, but the ABCT can guide you. If you don’t remember anything else, remember this: when the talking heads report record profits and the prospect of prosperity for ever, jump off the wave!
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