A Quote by Ludwig von Mises
Government policies try to prevent the emergence of serious unemployment by credit expansion, i.e., inflation. The outcome was rising prices, renewed demands for higher wages and reiterated credit expansion; in short, protracted inflation.
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There is no such thing as agflation. Rising commodity prices, or increases in any prices, do not cause inflation. Inflation is what causes prices to rise. Of course, in market economies, prices for individual goods and services rise and fall based on changes in supply and demand, but it is only through inflation that prices rise in aggregate.
There is no means of avoiding the final collapse of a boom brought about by credit expansion. The alternative is only whether the crisis should come sooner as the result of voluntary abandonment of further credit expansion, or later as a final and total catastrophe of the currency system involved.
Models used to describe and predict inflation commonly distinguish between changes in food and energy prices - which enter into total inflation - and movements in the prices of other goods and services - that is, core inflation.
Because food and energy prices are volatile, it is often helpful to look at inflation excluding those two categories - known as core inflation - which is typically a better indicator of future overall inflation than recent readings of headline inflation.
The final outcome of the credit expansion is general impoverishment.
To combat depression by a forced credit expansion is to attempt to cure the evil by the very means which brought it about; because we are suffering from a misdirection of production, we want to create further misdirection -- a procedure which can only lead to a much more severe crisis as soon as the credit expansion comes to an end.
No politician can praise unemployment or inflation, and there is no way of combining high employment with stable prices that does not involve some control of income and prices. Otherwise the struggle for more consumption and more income to sustain it-a struggle that modern corporations, modern unions and modern democracy all facilitate and encourage-will drive up prices. Only heavy unemployment will then temper this upward thrust. Not many wish to confront the truth that the modern economy gives a choice only between inflation, unemployment, or controls.
What is needed for a sound expansion of production is additional capital goods, not money or fiduciary media. The credit expansion is built on the sands of banknotes and deposits. It must collapse.
If global oil prices or commodity prices are high, then it is bound to create inflation. So, we should not be too worried if the inflation is created by global commodity prices. When they come down, inflation will automatically come down.
Inflation is not caused by the actions of private citizens, but by the government: by an artificial expansion of the money supply required to support deficit spending. No private embezzlers or bank robbers in history have ever plundered people's savings on a scale comparable to the plunder perpetrated by the fiscal policies of statist governments.
What people today call inflation is not inflation, i.e., the increase in the quantity of money and money substitutes, but the general rise in commodity prices and wage rates which is the inevitable consequence of inflation.
Rising prices or wages do not cause inflation; they only report it. They represent an essential form of economic speech, sincemoney isjust another form of information.
If a government resorts to inflation, that is, creates money in order to cover its budget deficits or expands credit in order to stimulate business, then no power on earth, no gimmick, device, trick or even indexation can prevent its economic consequences.
Since the eighteenth century the immense expansion of the worlds wealth has come about as a result of a correspondingly immense expansion of credit, which in turn has demanded increasingly stupendous suspensions of disbelief.
You can get a lot done when you don't care about credit. My name was not on Medicaid expansion, but it never would have happened without the work that I did. The best leaders are the ones that want results, not credit.
As 'Austrian' business cycle theory has pointed out, any bank credit inflation sets up conditions for boom-and-bust; there is no need for prices actually to rise.
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