Reflecting on the enduring temptation of governments to inflate and depreciate their currencies, King rightly observes: • “Inflation is very much a political process.” • “Left to their own devices, governments cannot help but be tempted by inflation.” • “Governments can and will resort to inflation.” • “By a continuing process of inflation, governments can confiscate, secretly and unobserved, an important part of the wealth of their citizens.” (Here he is quoting J.M.
Ultimately, there is no escaping ‘Burton-Taylor.’” When governments and central banks yield to this temptation, can the central banks correctly anticipate the inflationary outcomes?
Just as economics is always political economics and finance is always political finance, central banking cannot avoid being political central banking.
People found themselves caught up in the runaway inflation of 2021-2023, a wake-up call.
“The printing press is a temptation [I would say an inevitable temptation] precisely because it is an alternative to tax increases or spending cuts, a stealthy way in the short run of robbing people of their savings….
All these destructive events resulted from the actions of governments and their central banks.
Inflation continues and has continued to exceed the Fed’s 2-percent “target” rate.
https://www.aier.org/article/the-permanent-temptation-of-all-governments/
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