Tuesday, February 15, 2022

Why do governments create inflation? Milton and Rose Friedman

"Inflation is a disease, a dangerous and sometimes fatal disease, a disease that if not checked in time can destroy a society (long list of examples Russia and German after WWI, China after WWII, Brazil in 1954, Chile in 1973, Argentina 1976)  

"No government is willing to accept responsibility for producing inflation, even in less virulent degree.  Government officials always find some excuse--greedy businessmen, grasping trade unions, spendthrift consumers, Arab sheikhs, bad weather, or anything else that seems even remotely plausible. . . none of the alleged culprits possesses a printing press on which it can turn out those pieces of paper we carry in our pockets; none can legally authorize a bookkeeper to make entries on ledgers that are the equivalent of those pieces of paper."

"The more basic question is, why do modern governments increase the quantity of money too rapidly?  Why do they produce inflation when they understand its potential for harm?

From "Free to choose: a personal statement," by Milton and Rose Friedman,  p. 253-254, pb, 1990

https://en.wikipedia.org/wiki/CARES_Act  The CARES act under President Trump

https://www.whitehouse.gov/american-rescue-plan/  is our best example of a government creating inflation.

https://www.ncsl.org/ncsl-in-dc/publications-and-resources/american-rescue-plan-act-of-2021.aspx

https://www.investopedia.com/american-rescue-plan-definition-5095694

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