I have been writing that we are facing a period of high inflation since long before it was fashionable. Now I believe that, on the balance of probability, we face an entire decade of high inflation.
That’s not to say that inflation cannot decrease at times during the decade (e.g. if there is a recession) – just as in the 1970s, there were ups and downs of inflation – but overall it was one of the most inflationary decades on record.
In the first part of this article, I will briefly summarise my reasons for my “decade of inflation” prognosis. In the second part, I will offer evidence that inflation is not accidental, but a deliberate act of theft by governments, and finally, a conclusion.
This section does not purport to be comprehensive. It summarises just four of the great inflationary structural changes that are happening in the world today:
In defence of the above proposition, I offer the thoughts of a number of great thinkers. These are some of my favourite quotes on inflation, collected over a decade:
By a continuing process of inflation, government can confiscate, secretly and unobserved, an important part of the wealth of its citizens.
- J.M. Keynes
The most important thing is to understand that inflation is not an act of God, it is not a natural disaster, and it is not a disease. Inflation is a political strategy.
- Ludwig von Mises
I do not think it is an exaggeration to say history is largely a history of inflation, usually inflations engineered by governments for the gain of governments.
- Friedrich A. Hayek
Most of those in political office, quite understandably, are firmly against inflation and firmly in favour of policies producing it.
- Warren Buffet
The first panacea of a mismanaged nation is inflation of the currency; the second is war. Both bring a temporary prosperity; both bring a permanent ruin. But both are the refuge of political and economic opportunists.
- Ernest Hemingway
Inflation is always an evasion of reality – an attempt to maintain an artificial prosperity … [Leaders] have been backed into a corner by events and lack the moral courage or the political support to institute fundamental reforms, which would require them to inflict pain on the mass of commoners and vanquish powerful elites... …rulers bereft of backbone, ingenuity and capital attempt to postpone the impending crisis by inflating…
- William Ophuls, author of "Immoderate Greatness: Why Civilizations Fail”
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.
- Ayn Rand
Inflation, however, can only continue as long as there is the opinion that it will cease in the foreseeable future. Once the conviction is established that inflation will not stop, panic breaks out.
- Ludwig von Mises
I might add that probably the only politically palatable way that politicians can make our debt levels more manageable again is to inflate them away, by keeping the inflation rate a few percentage points higher than the interest rate. Given that we are facing a record amount of debt ever accumulated by humanity – some 370% of global GDP – there will be very little option but to inflate it away. Perhaps this is even the responsible course of action.