Inflation can be good

The libertarian conspiracy has used all of its formidable propaganda resources to insure that the Unites States does not institute the only measures which can save us from economic disaster. One such measure is inflation -- a controlled inflation.

Ian Welsh's post on the "Dutch disease" set me to thinking, once again, about the vast possibilities offered by inflation. If the dollar were worth less, foreigners would want to purchase more American goods. Those impossible-to-repay home loans would become very-possible-to-repay home loans. Paying back China becomes much less painful. Newly printed dollars -- and I would argue that a controlled inflation should take the form of actual, physical cash -- could be used to provide jobs to the unemployed and homes to the homeless.

It's also true that ultra-low interest rates helped to create the financial crisis in the first place. Paul Krugman once uttered a very simple truism:

Deflation redistributes wealth from debtors to creditors.

Whenever anyone speaks of the virtues of a controlled inflation, the fearmongers bring up the specter of Weimar, of hyperflation. But hyperinflation is a very different animal, with differing causes.

Inflation can be good. And for precisely that reason, the right-wing press has expended a great deal of energy trying to convince the populace that the greatest menace facing this country was and is inflation. As we've noted in previous posts, Fox News heavily pushed the nonsense spewed by a group called the National Inflation Association -- run by pump and dump stock scammer Jonathan Lebed. Lebed's gang tried to convince the populace that onions would soon cost about fifteen bucks.

Absurd.

Inflation cannot be said to exist unless wages and home prices go up. Is that happening? True, some commodities have risen in price, due, in large part, to the shark-like shenanigans of Wall Street speculators. But inflation is a wage-price spiral; if your wages aren't on the increase, your economic problems require another label.

I can only repeat the words I wrote last year:

I suspect that the people screeching about hyperinflation want this country to collapse. They want Apocalypse Now. These people have a vision: They want to replace our current system with their proposed libertarian paradise. You can't build a New Jerusalem without first whipping up a proper Armageddon.