Greenspan has been chairman of The Federal Reserve Board for the
past 18 years. He will retire with full honors despite the fact
that his tenure has seen our money supply grow continuously and
the dollar fall in value. 18 years ago the Consumer Price Index
was 109.6. Today it has reached 191. What you could buy for a dollar
18 years ago would take $1.74 today. This is the Greenspan heritage
that the media considers a success. Of course he did not accomplish
it alone. It required the complicity of the collection that rules
us, a spendthrift gang with a doomed plan (or lack of plan) to police
(1983) defines inflation as an increase in the amount of currency
in circulation, resulting in a relatively sharp and sudden fall
in its value and rise in prices: it may be caused by an increase
in the volume of paper money issued or of gold mined. It is not
defined as the increase in prices but as the increase in the supply
of money that causes the increase in prices.
what inflation does. The government issues new money, i.e., raises
funds without taxing or borrowing. To the government, this is pure
gain. As the new money works its way through the economy, prices
rise. The first receivers of the new money gain at the expense of
the later receivers. "Inflation, then, confers no general,
social benefit; instead it redistributes the wealth in favor of
first comers . . ." Those stuck with the loss include fixed
income groups, ministers, teachers, people on salaries, those on
fixed money contracts made before the price rise, life insurance
beneficiaries, retirees, landlords with long term leases, bond holders
and other creditors, and those holding cash.
calculation becomes more difficult. Prices do not change uniformly
or at the same speed; it becomes harder to separate the lasting
from the transitional, to guess the demands of consumers. Business
accounting may seriously overstate profits, "may even consume
capital while presumably increasing investment."
seeming sellers market leads to a declining quality of goods and
services, since consumers resist price increases less when they
are concealed by less quality. Quality of work declines as people
go for "get rich quick" schemes and scorn sober effort.
Thrift is penalized and debt encouraged, since debt is paid off
in lower valued money.
then, lowers the general standard of living (think of that 57 cent
dollar) as it creates an atmosphere of prosperity." More importantly,
over time it destroys the fabric of society. Thomas Mann's short
story Disorder and Early Sorrow describes an afternoon in the life
of a middle class German family that is failing due to collapsed
standards caused by the existing inflation. That family lived in
a society that evolved into Nazism. It is not hard to find a parallel
between it and our easy money, morally sloppy society.
and communities continue to fail. The media emphasizes corporate
misdeeds over government corruption even though it is hard to find
any reason to trust politicians or government bureaucrats. At least
not all chief executive officers are crooked, something one cannot
be sure about in government. While Greenspan cannot be held responsible
for all this, a milieu has been created that he exemplifies, in
which he stands out. Although not as contemptible as the sharpshooter
who killed the woman with the baby in her arms at Ruby Ridge, he
is on a par with the authorities who found themselves unable to
discipline the sharpshooter, but felt obligated to honor him.
Crispin [send him mail]
is a retired businessman who heads a Catholic homeschooling cooperative
in Auburn, Alabama.