highways -- circa 1957

Dennis R Redmond dredmond at OREGON.UOREGON.EDU
Mon Aug 24 04:03:33 PDT 1998


On Sun, 23 Aug 1998, Steve Bruns wrote:


> Totally unrelated question: Since the US government can control the
> supply of money via policy (essentially owning the dollar printing
> press), wouldn't it be possible for the gov't to slowly inflate its way
> out of debt? It worked for mortgaged homeowners in the late '70's. Or
> does this send the transfer of wealth heading in the "wrong" direction?

Of course -- by lowering interest rates to below the inflation rate and then stimulating demand (a polite synonym for "taxing capital and raising real wages"). This is how we financed WW II -- via humongous, inflationary deficits. Of course, nowadays you'd want to spend the money on schools and science labs rather than aircraft carriers. But rentiers don't want prosperity, they want slow growth, high unemployment, and high real interest rates, all of which redistributes income from workers to rentiers. This is why Hell hath no fury like Alan Greenspan waxing about the horrors of inflation. And of course the US economy grew faster in the inflationary 60s and 70s than in the 90s, something which doesn't bother rentiers, whose only criteria of success is the level of the S&P 500.

-- Dennis



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