Painkillers For An Economy
December 4, 2008 9:44pm CST
When an athlete injures himself and suffers great pain, a doctor could of giving him painkillers to keep him going. The pain might be masked, but at the risk of greater injury later. The same can be applied toward the inflationary policies now pursued by Washington. These policies may temporarily "stimulate the economy," but they also disguise and aggravate the underlying problems. We will all pay a serious price. True we do associate inflation with a rising price level, but equally important, relative prices change when new money is created. That garbles the messages. As Ludwig von Mises writes, "The additional quantity of money does not find its way at first into the pockets of all individuals; Price changes which are the result of inflation start with some commodities and services only. There is a shift of wealth and income between different social groups." How can the economy straighten itself out if it is being systematically skewed by government inference with prices?
5 Dec 08
I do not think inflation is a good idea if done to an extent. For instance, I don not live in the States, and if I were to order something, it will cost way more. Also the cost of goods and services go up, and not only the poor people, but the middle class can afford it. Since American money is not backed by gold as it used to be, you are just buying things with paper and at the mercy of speculators.