"The link between the paper dollar and the exponential expansion of public debt is well known. From the point of view of the creditors, the federal government controls the Federal Reserve—the monopoly producer of paper dollars—and it can therefore never go bankrupt. If necessary, the federal government can have any quantity of dollars printed to pay back its debt. Buying government bonds is thus backed up with a security that no other debtor can offer. And the federal government can constantly expand its activities and finance them through additional debt even if there is no prospect at all that these debts will ever be paid back out of tax revenues. The result is seemingly unchecked growth of those governments that control the production of paper money. Among the many causes that coincided in bringing about this state of affairs is a certain lack of resistance on the part of professional economists. In the present essay I will deal with a wrong idea that has prevented many economists and other intellectuals from fighting inflation with the necessary determination. Most economists backed off from opposing inflation precisely when it was needed most, namely, at the few junctures of history when the inflationary system was about to collapse. Rather than impartially analyzing the event, they started fearing deflation more than inflation, and thus ended up supporting “reflation”—which in fact is nothing but further inflation." Read more or buy it here.
Jorg Guido Hulsmann
Via the Ludwig von Mises Institute.