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Inflation And The Economy Essay

7838 words - 31 pages

Inflation and the Economy

WHY UNDER MONETARY FREEDOM INFLATION COULD BE STOPPED WITHOUT BRINGING ABOUT UNEMPLOYMENT

1. Unemployment and inflation do coexist and inflation causes much unemployment which would cease with it.

2. Excessively inflated prices would fall to market prices and so promote sales
and employment.

3. Less government spending would mean more private spending.

4. Prices and wages could be adjusted fast. If this is not done then this is not
the effect of stopping inflation!

5. Price adjustments through gold-value clearing could take place already during
a continuing paper money inflation - leaving no adjustment problem.

6. While FALLING prices do indeed deter from buying and promote unemployment,
FALLEN prices do the contrary. Under monetary freedom there would only be FALLEN prices.

7. The un- or under-used productive capital investment would, under monetary
freedom, be almost fully used and would thus ensure that there arises or remains
no unemployment.

8. Under monetary freedom there would also be no difficulty to mobilize fully
the real working capital of any country: the goods and services ready for retail
sale and to finance with them full employment - naturally at market wages and
prices.

9. Monetary freedom would allow all desired exchanges to take place and would
put Say's Law, that supply tends to create equivalent demand, into practice. No
sales difficulties or unemployment would result.

10.Unemployment is an unnatural condition: Under monetary freedom it would no
more occur than under barter.

TEN WAYS HOW, INDEED, WRONG ATTEMPTS TO STOP INFLATION COULD LEAD TO UNEMPLOYMENT - UNDER CONTINUED MONETARY DESPOTISM.

1. Stopping the note printing presses suddenly while suppressing monetary
freedom and upholding all price and wage restrictions.

2. Paying men not to work (unemployment "insurance").

3. Deflationary withdrawal of notes from circulation - while free banking
remains suppressed.

4. Replacing the old currency at an arbitrary rate, not the free market rate,
and most likely supplying not enough new currency because under monetary
despotism there is no yardstick like the free market rate for currencies.

5. Continuing monetary despotism with all its uncertainties and the expectation
of further inflation.

6. Tax increases and their stricter collection - with their deflationary
effects.

7. Delays in spending of tax-collected funds after the official currency
"reform".

8. Issuance of a new "reformed" currency in quotas only.

9. Insistence on gold payments or gold redemption - regardless of the
availability of gold and existing or possible alternative private contractual
arrangements, i.e.: part redemption (revival J.Z., 1999) of monetary despotism
in the form of an exclusive gold standard.

10.Issuance of the new currency only to the extent that foreign loans are
available as "backing".

I...

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