From Caroline Baum’s excellent opinion piece:
Here was Federal Reserve Chairman Ben Bernanke, one of the outstanding monetary economists of his time, talking about inflation as if it were the result of some pesky exogenous forces.
For example, anyone reading the Feb. 7 New York Times article on the ravages of Zimbabwe’s hyperinflation (1,594 percent in January, and that’s month-over-month) would be confused about what causes inflation. After stating that hyperinflation is “eroding the government’s control over every aspect of public life’’ -- as if it were the control, not the lives, that mattered -- the Times quotes Harare economist John Robertson on the problem at hand.
The government says “they can fix prices, but the things that cause price increases come from so many different directions that the government can’t control them all,’’ Harare told the Times.
Funny thing about those multidirectional price-increase emanations. They may come from so many different directions, but they all originate with one source: too much money.
But excess money creation is the cause of inflation, and it would be better if the Fed could make the public understand that the rise in the price level is not a result of higher commodity prices, aggressive labor union demands for wage increases or greedy businessmen trying to milk the public.
So not only is politics opposed to economic truth and honesty, but each one of these governments believes that they’re progressive on economic matters to the exclusion of others. And, we, the people, believe that if the government didn’t control the money supply, anyone could just print up the money they wanted to and would create calculational chaos.
For more information on Baum, see Cyd Malone’s review of her book, Just What I Said.
