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Larry Moss wrote:
<< The basic pattern is well-known to economists. The inflationary process
proceeds always in a political context with parties and interest groups who
may understand the redistributive effects of inflation and still hope to
gain wealth or status by supporting the process. One dimension of the
revolution on modern economic thought especially surrounding the public
choice school has been to emphasize this political process. In Argentina's
case the story that needs to be told would be less about a maverick central
bankers extending credit and more about a government trying to provide
social programs to stay in power. <<
In the traditional literature, some Austrians have touched upon this
important process and, to some extent, the politics behind new money. Both
Hayek and Von Mises, for example, have discussed the uneven and stepwise
nature of the inflation process and have, to a very limited extent, touched
upon the politics behind new money. Unfortunately, most eminent QTM
[Quantity Theory of Money] proponents, such as Irving Fisher, have really
preferred to focused mostly on what would constitute the structure of a
comprehensive price level and how could it best be measured and have mostly
ignored the political and institutional aspects which precede the creation
of new money. It should be noted that Fisher, however, in his PPM
[Purchasing Power of Money, 1911], did outline the asymmetrical nature of
the adjustment in interest rates to new money and how this part of the
process contributes to swings in the business "cycle." And, also Robertson
in his discussions on forced saving, touched upon the stepwise process of
new money and inflation, but again, like Fisher, had no interest in really
going ahead of the process to explore the political culture around new
money.
Laurence's last sentence above, I think, really encapsulates the
contemporary political climate surrounding the call for the new
"Argentino." There has been no mention in the press about how the
Argentinoes will get into circulation. It seems the government prefers it
to be a mystery.
Chas
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