Do You Want to Whip Inflation Now?

Do You Want to Whip Inflation Now?

Christopher Paige

By “kill,” I don’t m-ean murder. For t-his to work, you n-eed to execute him for so-me “crime” and as the r-esult of some “legal” process.
And by “Bill Gates,” I don’t mean him, as any sufficiently-wealthy and high-profile victim will do.
If you accept the proposition that inflation is the result of too much money, then you must admit that defeating inflation means that we need to shrink the money supply. Traditionally, the central bank has raised interest rates in order to reduce the supply of credit in the economy, thereby shrinking the money supply, but terror would work just as well – maybe even better.
That is, if the government started executing rich people for their “crimes,” then rich people would stop lending. And, as long as you limited your random killings to people who had perpetrated some well-defined and easily-definable act, the general economy wouldn’t need to suffer (very much). After all, what do I – or any other small business person – care if the government executes rich people who donate billions to vaccines (or some other highly-specific crime)? I can, in this scenario, become as rich as I like, as long as I don’t devote my wealth to similar charities.
And, even if there is some over deterrence, we’ve only deterred charitable activities, not business activities.
If all of this strikes you as abhorrent, good – you’re a decent human being, but a terrible politician. The easiest way to profit from inflation as a politician is to define your enemies in such a way that you can strip them of their wealth – and, potentially, their lives – without endangering anyone else. If, say, you declare all Trump supporters to be enemies of the state, then you can kill them quite legally without terrifying anybody else.
Of course, the problem with Trump supporters is that they aren’t particularly wealthy, and they’re hard to define in a way that others wouldn’t be afraid that they might be next, so you’d have to kill a bunch of them in order to make any real headway in shrinking the money supply, and the unintended consequences would be extreme. If, however, you could identify a group of extremely wealthy people who share the same political ideology…an ideology you could vilify in order to justify your ascent to power… then you’re in business!
And, of course, once you’re in power, the resulting economic boom is likely to keep you there. (Not to mention the fact that redistributing their wealth is likely to earn you a great deal of loyalty.)
In short, inflation isn’t likely to destroy the value of government fiat currency, but it is likely to destroy the value of the government that issues it. Inflation creates an economic incentive – aka a political opportunity – for unscrupulous people to solve inflation via violence, and, if economics teaches us anything, it’s that few opportunities are wasted.
One does not have to believe that Bill Gates – or anyone else – deserves to be killed in order to warn against creating incentives to kill Bill Gates. To the contrary, it’s quite reasonable to believe that we need absolute prohibitions on certain governmental actions precisely because those actions lead to disaster. Like fiat currencies.
One of the great, and underestimated, advantages of the gold standard (or any other form of sound money) is that killing the king does not affect his pile of gold, thereby greatly reducing anyone’s incentive to kill the king. In contrast, fiat money means that the value of the king’s life is inextricably intertwined with the value of the king’s money, which is awfully dangerous for the king and his supporters.
Humanity’s capacity for political violence is unlimited, but that’s no excuse for facilitating and incentivizing our worst impulses through fiat currency. If anyone should recognize the importance of operating systems, it would be Bill Gates, and fiat currency is a very dangerous operating system indeed.
As believers in the subjective value of assets, we students of the Austrian school should never cease to warn others of the dangers inherent to granting the government a monopoly on an asset as important as money; namely, that violence is one of the most effective means to change subjective valuations ever invented. If anyone should be entrusted with the power to create assets, it shouldn’t be an institution that also entrusted with a monopoly on lawful violence as the temptation to use the one monopoly to alter the valuations in the other is too great for any mortal. Even Sauron, after all, didn’t claim a monopoly on magical rings.
Combining such monopolies into one, therefore, is the height of folly.

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