October 25, 2011

Money Expansion the Root of all Evils

While looking around for our weekly readings the other week I came across this article on the Mises.org website. It gets it main points from our recent readings on Rothbard and inflation, but it also brings up some interesting points that may not be so obvious. It re establishes the fact that has been brought up in the past readings such as inflation being the cause of boom and bust cycles. It also shows that it has political implications that gives ever more power to a government that actually deters and destroys wealth. It is shown how without inflation programs that redistribute wealth need inflation to "pay" for their programs. Yet they really do not pay but transfer the cost via taxes and indirect taxation otherwise known as inflation. These implications tend to cater to the conservative side of the spectrum as much of Austrian Economics often does.
However in this article there seems to be ideas that would appeal to the progressive or liberal crowd if only it was recognized that there goals require action the opposite of more government control or printing of money. While this may seem an impossible task I think the only explanation needed is how successful government has been so far in delivering these goals. One of the goals left wing tends to seek is reduction in the use of resources or being green. Through Inflation we get increased levels of consumption through increased money/credit, and not enough saving and investment which could lead to a much brighter future with better technologies. Another goal they seem to have is controlling costs so there is better access for all, yet with inflation there will be ever increasing costs in health care and many other industries so this creates a cycle of ever increasing price restrictions. Without inflation there would be a constant cost if not decreasing cost as technology improved from the increasing investment. Lastly yet very importantly the lack of inflation promotes the idea of peace, toward the end of the article Barron mentions how without inflation and in the presence of free trade people in a marketplace result in cooperation rather than confrontation in seeking to better themselves. So without inflation many of the problems that progressives tend to want to alleviate would be lessened if not all together disappear. Austrian economics when viewed through an open mind provides something for all interested in political economy as an alternative to what has been practiced for many years with Neo Classical, and seemed to present ever increasing problems.

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