“Domestic Inflation Versus International Solvency” – Gary North
“The nation which indulges itself with an inflationary “boom” inev itably faces the economic conse quences: either runaway inflation or a serious recession-depression. If the inflation should cease, unem ployment will increase, and the earlier forecasts of the nation’s entrepreneurs (which were based on the assumption of continuing inflation) will be destroyed.4 Since no political party is anxious to face the consequences at the polls of a depression, there is a tendency for inflations, once begun, to become permanent phenomena. Tax in creases are postponed as long as possible, “tight” money (i.e., high er interest rates) is unpopular, and cuts in governmental expenditures are not welcomed by those special interest groups which have been profiting by the state’s purchases. The inflation continues…
This should serve as an intro duction to the domestic problem which faces the various western democracies. From an internation al standpoint, the situation is re versed. The primary need for in ternational trade is a common means of payment which is not subject to violent upward surges, a money free from most inflation ary tendencies. Foreign govern ments and central banks want to be able to trust their neighbors’ currencies.” Read more.
“Domestic Inflation Versus International Solvency”
Gary North
The Freeman, February 1967, Volume 17, Issue 2.
Via the Foundation for Economic Education.
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