Thorstein Polleit has an article coming up on MIses.org, and it quotes Mises in a way that is just too interesting not to blog ahead of time, however tacky it might be for me to loot a forthcoming article of some of its best material:
The boom produces impoverishment. But still more disastrous are its moral ravages. It makes people despondent and dispirited. The more optimistic they were under the illusory prosperity of the boom, the greater is their despair and their feeling of frustration. The individual is always ready to ascribe his good luck to his own efficiency and to take it as a well-deserved reward for his talent, application, and probity. But reverses of fortune he always charges to other people, and most of all to the absurdity of social and political institutions. He does not blame the authorities for having fostered the boom. He reviles them for the inevitable collapse. In the opinion of the public, more inflation and more credit expansion are the only remedy against the evils which inflation and credit expansion have brought about. (Human Action, p. 576)
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Shouldn’t it be “probity”, not pro-bity?
Thomas Mann’s short story, “Disorder and Early Sorrow” is probably the best fictional portrait of the destructive social and cultural effects of the German hyperinflation.
Fed Policy in Action
S&P Banking Index vs Dow Jones Commodity Index
http://finance.yahoo.com/echarts?s=^BIX#chart8:symbol=^bix;range=2y;compare=^djc;indicator=volume;charttype=line;crosshair=on;ohlcvalues=0;logscale=on;source=undefined
As expected that which is severed from moral authority leads to depravity. In economics the depravity is the continual journey down the road to serfdom where the end result is totalitarianism – the loss of identity or soul.
Inflation is theft, silent extraction, bit by bit until the future (hope) disappears. The cause can be identified as coming from the ravenous ego-driven interventionists.
Inflation clearly heightens time preferences, and this is manifested all through our consumptive, short-sighted culture. My hypothesis is that inflation is a horribly corrosive social factor.
Bernanke agrees that Ron Paul is correct (on the inflation tax):
http://youtube.com/watch?v=aT0txlTod8w&feature=rec-fresh
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