Thursday, September 10, 2015

Inflationary policies similaritaries to Socialism

Today, I would like to focus on two observations by Ludwig von Mises. According to Mises, “True, governments can reduce the rate of interest in the short run. They can issue additional paper money. They can open the way to credit expansion by the banks. They can thus create an artificial boom and the appearance of prosperity. But such a boom is bound to collapse sooner or later and to bring about a depression.

I wished central banks would understand this issue clearly.

Mises also noted that, Inflation-ism, however, is not an isolated phenomenon. It is only one piece in the total framework of politico-economic and socio-philosophical ideas of our time. Just as the sound money policy of gold standard advocates went hand in hand with liberalism, free trade, capitalism, and peace, so is inflation-ism part and parcel of imperialism, militarism, protectionism and socialism.

I believe that inflation-ism is not only part and parcel of socialism but also of increased regulation, diminishing personal freedom and, therefore, of lower economic growth potential.



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