Forty-five years is a long time to preach about the inevitability of runaway inflation without it happening. Most assuredly we have experienced the booms and bust the Austrian School warns will accompany credit excess. Yet, the severe inflation that makes our financial affairs completely unmanageable remains at bay. Certainly we’ve had inflation. The dollar has lost over 90% of its purchasing power in my lifetime. But we have been able to live with it. Now our bankers, politicians, and brokers wish to encourage inflation. In Washington and Wall Street inflation has gone from being our enemy to our friend and that is crazy. As economist Jörg Hülsmann points out, “Fiat inflation is a juggernaut of social, economic, cultural, and spiritual destruction.”
So what happened to the hyperinflation that was forecast over the years? We almost had it in 1979-1980 when interest rates were hiked to 19%. Then it became subdued despite the fact that the government kept on spending and financing its deficits with newly created money. We have been the chief inflationist in the world and it still hasn’t caught up with us. One reason is that we started shipping money around the world to buy things. We exported our inflation for imports. We jacked up price inflation around the world while keeping it under control domestically.
Then the rest of the world caught on. They started printing money to pay for their spending just like the U.S. So now we have the entire world inflating. Look at Japan and the European Union covering deficits with the printing press. Now it’s not the U.S. alone that will crash and burn, it’s the whole world. The late economist Murray Rothbard told us what happens when inflation goes international: “At the end of the road will be a horrendous worldwide hyperinflation, with no way of escaping into sounder or less inflated currencies.” When a nation embraces dishonesty as a policy and waters down its money it plants the seeds of financial destruction. What will come from the greatest monetary sin in history is the greatest economic punishment in history.