Inflation is a dangerous and sometimes fatal disease

Inflation is a dangerous and sometimes fatal disease; a disease that, if not stopped in time, candestroy society.

Inflation is a dangerous and sometimes fatal disease; a disease that, if not stopped on time, can destroy society. There are many examples of this.

Hyperinflation in Russia and Germany after the FirstWorld War II, when prices sometimes rose two or more times a day, set the stage for communism in one country and Nazism in another. Hyperinflation in China after World War II made it easier for Chairman Mao to defeat Chiang Kai-shek. When inflation in Brazil reached 100% in 1954, it brought the military to power. Much higher inflation contributed to the overthrow of Allende in Chile in 1973 and Isabella Peron in Argentina in 1976, and in these countries the soil for the military junta came to power.

No government wants to take overresponsibility for the occurrence of inflation, even in its least dangerous form. Government officials always find some kind of apology: greedy businessmen, demanding trade unions, wasteful consumers, Arab sheikhs, bad weather and any other reasons that have at least the appearance of credibility. No doubt businessmen are greedy, trade unions are demanding, consumers are wasteful, Arab sheikhs have inflated oil prices, the weather is often bad. All this can lead to higher prices for certain goods, but cannot cause a rise in the price level. This can lead to temporary jumps in inflation up or down, but it can not cause constant inflation for one very simple reason: none of the alleged culprits has a printing press for the production of these pieces of paper that we carry in our pockets; none of them can legally authorize an accountant to make entries in ledgers that are equivalent to these pieces of paper.

Inflation is not a capitalist phenomenon. In Yugoslavia, a communist country, inflation was one of the highest in Europe, and in Switzerland - the bastion of capitalism - the lowest. Inflation is not a communist phenomenon. China had low inflation under Mao; in Italy, Great Britain, Japan, the USA, which are developed capitalist countries, significant inflation has occurred in the last decade. In the modern world, inflation is a phenomenon of the printing press.

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This was an excerpt from Milton Friedman's famous book, Free to Choose, 1979

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