The Wonders of Inflation
If there is one thing that’s worse than inflation, its deflation. It grinds the economy to a standstill because you wait to buy and can’t pay off debts (which increase regardless of interest rates). This often results in political extremism or revolution, like the Chartist rebellion of the 1840s, in England.
Only a few months after catastrophic inflationary fears because of oil prices tripling, we now have the threat of deflation. With an economy that is is recession and no more interest to cut, there are no more monetary weapons available except to print money and stimulate inflation.
The euphemism for this is ‘quantitative easing’. What it means is: print money but do it very carefully, in case you end up getting runaway inflation. In which case, to put it plainly, you are fucked.
When this film was made, inflation wasn’t such a dirty word that expressions such as quantitative easing were needed and it actually extols the virtues of diluting the value of money. Because of this frankness, its worth watching now.
America came off OK in the 30s, Germany did not. Germany ended up with hyper-inflation and it created political extremism. In the United States government sponsored home building and mortgages created a home ownership democracy that stalled the emergence of communism. This time, it is the home ownership democracy that was the root cause of failure.
When I watch this film, a nasty though comes to mind. What if the oil spike returned as the economy eased, and we were still printing money?