The Humble Libertarian

Building a small army to take over the world and... leave everybody alone.

Thursday, March 15, 2012

Watch Bernanke’s ‘Little’ Inflation Capsize U.S

Bloomberg has a great piece on monetary inflation.
A little is all right. That’s the message Federal Reserve Chairman Ben S. Bernanke has been giving out recently when asked about the evidence of inflation in the U.S. recovery. Sometimes Bernanke doesn’t even go that far. He simply says he doesn’t see inflation...“Sudden” is more like it. The thing about inflation is that it comes out of nowhere and hits you....“Sudden” has happened to us before. In World War I, an early version of what we would call the CPI-U, the consumer price index for urban areas, went from 1 percent for 1915 to 7 percent in 1916 to 17 percent in 1917....How did it happen? The Treasury spent like crazy on the war, creating money to pay for it, then pretended that its spending was offset by complex Liberty Bond sales and admonishments to citizens that they save more...History has other examples. In 1945, all seemed well: Inflation was 2 percent, at least officially. Within two years that level hit 14 percent. All appeared calm in 1972, too, before inflation jumped to 11 percent by 1974...
Read the rest here