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Quotation of the Day

Posted: 19 Jun 2022 01:15 AM PDT
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(Don Boudreaux)




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is from pages 502-503 of the late Wesleyan University economic historian
Stanley Lebergott’s great 1984 book, The Americans: An Economic Record
(footnotes deleted; link added; brackets and ellipses original to
Lebergott):

The progressive deterioration in the value of money through history is not
an accident, and has behind it two great driving forces, wrote Keynes in
1924. One was the superior political influence of the debtor class. That
force has been only mildly effective in the United States. Connecticut and
Massachusetts experimented by printing paper money in the 1740s and Rhode
Island by printing it in the 1790s. These represented the high point of
debtor influence. Populism’s failure in the 1890s, and the limited
reflation of the 1930s, showed that such forces have been weak in the
United States.

The second force, said Keynes, was the impecuniosity of governments. What
is raised by printing notes [i.e., money] is just as much taken from the
public as is a beer duty or an income-tax. In some countries it seems
plausible to please and content the public by giving them, in return for
the taxes they pay, finely engraved acknowledgements on water-marked paper.
Inflation as a potent instrument of government extraction surfaced in
1968-69 when the federal government rapidly increased expenditure for both
a war in Vietnam and a war on poverty at home. Over the next decade the
voters revealed their desire for ever more programs of expenditure, welfare
and/or defense, and an almost equal desire to pay no increased taxes for
such programs. Inflation proved a way to reconcile these conflicting
desires.

DBx: History will tell if, in the 21st century, debtors in America remained
as politically neutered as they were in earlier centuries.




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