Economics

"The declared object of deflation was the restoration of the gold standard at pre-war parity. Its actual effect has been to create unemployment by the restriction of industrial credit. By the lever of unemployment it has forced down wages and has thus facilitated the return to gold through the reduction of prices. An incidental effect has been to transfer purchasing power from the workers, whose wages have been reduced, to the bondholders, whose interest has remained the same. It has also doubled the real burden of Debt since 1920, and was largely responsible for the mining lock-out last year, by the reduction in terms of sterling of the money which we receive for coal sold abroad. Deflation, in fact, has been responsible for a sinister catalogue of disasters which can be substantiated in detailed argument that has never yet been rebutted."

"The clear and present danger is, instead, that Europe will turn Japanese: that it will slip inexorably into deflation, that by the time the central bankers finally decide to loosen up it will be too late."

"You can't push on a string."

"Globalization was exerting a dis-inflationary impact."

"Between August 1921 and August 1929 the Dow Jones Industrial index increased by a factor of 4.4. Other prices, however, had not risen so far. Some were already falling. For those fortunate enough not to be fighting it, the First World War had been a two-fold boon. The temporary diversion of so much European production into the business of destruction had allowed Asian and American producers to expand mightily, but they could not wholly compensate for the disruption caused by the war. It was a global seller's market. At the same time, the inflationary financing of the war, as governments printed money to pay for their deficits, pushed up world prices. The spot price of wheat in the Chicago market - a reasonably good proxy for traded primary commodity prices - hit roughly treble its pre-war average in 1917 and again in 1920. The twin stimuli of dearth and currency depreciation ended thereafter, and a global recession in 1920-21 saw steep declines in the prices of primary products and manufactures. Thereafter, they barely recovered. The price of wheat peaked in February 1925 at 182 cents a bushel (compared with 294 cents in May 1920) and by May 1929 it was down to 102 cents. Similar forces were driving down the world prices of other key commodities like iron and steel. This deflation was the overture to the Great Depression. In the 1920s it meant poverty for farmers, but easy living for those who received the profits of industry and finance."

"See your disappointments as good fortune. One plan's deflation is another's inflation."

"The big, looming, monetary issue is "quantitative easing": that is, printing money. What happens is that the government borrows from the Bank of England, not from the markets. It expands the money supply to keep the economy going and also to counter deflation without simultaneously increasing government debt. The attractions are obvious, as are the dangers. The Robert Mugabe school of economics provides a salutary warning about uncontrolled monetary expansion in generating hyper-inflation. The road to Harare is not as long as we might hope. Monetary easing may prove to be necessary but will have to be managed with great skill and care: Too little easing and the crisis drags on – as in Japan. If there is too much, the authorities face the messy task of mopping-up liquidity by issuing bonds which add to the burden of borrowing or else we lurch back from deflation to inflation. So interest rates may soon become yesterday's story."

"To every outworn shibboleth of 19th-century economics he clung with fanatic tenacity. Economy, Free Trade, Gold - these were the keynotes of his political philosophy, and deflation the path he trod with almost ghoulish enthusiasm."

"Ziyauddin's sarcasm is incisive. Occasionally his sardonic humour helps him to sum up his ideas in a few words. His remark that in Alauddin's days "a camel could be had for a dang," but wherefrom the dang?" - shows at once how the reforms of Alauddin had made articles cheap and people poor."

"It is our increase in the cost of capital that causes the inflation cycle. We do not labor or manage, and yet we receive the profits. Through our money manipulation, the capital that we supply industry costs us nothing. Through our national bank, the Federal Reserve, we extend book credit which we create from nothing to all local banks who are member banks. They in turn extend book credit to industry. Thus, we do more than God, for all of our wealth is created from nothing. You look shocked! Don't be! It's true, we actually do more than God. With this supposed capital we bring industry, management and labor into our debt, which debt only increases and is never liquidated. ... We are the necessary element since we expend nothing. Management can create its own capital and keep the cream - the profits. Its business would grow and profits increase."

"You know what's worse than high inflation and low unemployment? It's high inflation and a recession with millions of people out of work. I hope you'll reconsider that, before you drive this economy off a cliff."

"Let's turn inflation over to the post office. That'll slow it down."

"As in so much else, the French revolutionary regime (1789–94) was the precursor of the centralized, totalitarian, managerial, pseudo-democratic despotisms that now reign over the West. It is also reminder that mass democracy and inflation go together, as surely as thunder and lightning. Let us revisit the Revolution, from a free-market, hard-money perspective."

"Everyone in the world needs money – to get paid, to trade, to live. Paper money is an ancient technology and an inconvenient means of payment. You can run out of it. It wears out. It can get lost or stolen. In the twenty-first century, people need a form of money that's more convenient and secure, something that can be accessed from anywhere with a PDA or an Internet connection. Of course, what we're calling 'convenient' for American users will be revolutionary for the developing world. Many of these countries' governments play fast and loose with their currencies. They use inflation and sometimes wholesale currency devaluations, like we saw in Russia and several Southeast Asian countries last year [referring to the 1998 Russian and 1997 Asian financial crisis], to take wealth away from their citizens. Most of the ordinary people there never have an opportunity to open an offshore account or to get their hands on more than a few bills of a stable currency like U.S. dollars. Eventually PayPal will be able to change this. In the future, when we make our service available outside the U.S. and as Internet penetration continues to expand to all economic tiers of people, PayPal will give citizens worldwide more direct control over their currencies than they ever had before. It will be nearly impossible for corrupt governments to steal wealth from their people through their old means because if they try the people will switch to dollars or Pounds or Yen, in effect dumping the worthless local currency for something more secure."

"“The amount of cuts you’d have to do to move the needle on inflation are completely off the table,” said Jon Lieber, a former aide to Senator Mitch McConnell of Kentucky who is now the Eurasia Group’s managing director for the United States."

"But while Republicans insist they will be better stewards of the economy, few economists on either end of the ideological spectrum expect the party’s proposals to meaningfully reduce inflation in the short term. Instead, many say some of what Republicans are proposing — including tax cuts for high earners and businesses — could actually make price pressures worse by pumping more money into the economy. “It is unlikely that any of the policies proposed by Republicans would meaningfully reduce inflation in 2023, when rapidly rising prices will still be a major problem for the economy and for consumers,” said Michael R. Strain, an economist at the conservative American Enterprise Institute."

"The natural tendency of the state is inflation."

"The real story in the inflation data was the upside in the more cyclical and persistent components like rent. That tells us that there’s an important source of support that is likely to keep the inflation data firm in the months ahead and potentially beyond"

"A merchant trading with capital has been injured by the depreciation of money, as his capital has not been equal to the same extent of business as before the depreciation; but there are few merchants in this situation:—their capitals, as well as that of tradesmen, are invested in goods, ships, &c. they are rather debtors than creditors to the rest of the community... the prices of their commodities will undergo the same variations as the prices of all others, their comparative value will... be the same... The depreciation of the circulating medium has been more injurious to monied men... It may be laid down as a principle of universal application, that every man is injured or benefited by the variation of the value of the circulating medium in proportion as his property consists of money, or as the fixed demands on him in money exceed those fixed demands which he may have on others. Thus the farmer is injured by any increase in the value of money... whilst he has a fixed money rent, and fixed money taxes to pay. His produce... will sell for less, whilst his taxes and rent continue the same. ...He, more than any other class of the community, is benefited by the depreciation of money, and injured by the increase of its value."

"Mr. Carter had also promised that he would not use unemployment as a tool to fight against inflation. And yet, his 1980 economic message stated that we would reduce productivity and gross national product and increase unemployment in order to get a handle on inflation, because in January, at the beginning of the year, it was more than 18 percent. Since then, he has blamed to the people for inflation, OPEC, he's blamed the Federal Reserve System, he has blamed the lack of productivity of the American people, he has then accused the people of living too well and that we must share in scarcity, we must sacrifice and get used to doing with less. We don't have inflation because the people are living too well. We have inflation because the Government is living too well."

"Of course, some responsibility for overstimulating lies with the Federal Reserve, which responded correctly to the onset of the pandemic by cutting interest rates and shoveling money into the financial system. More recently, the Fed has been too slow to curtail its program of buying debt, sending still more money to chase those few goods. And until recently, Fed officials were echoing the White House line about “transitory” inflation. For the Fed, addressing inflation will mean raising interest rates, perhaps sooner than it thinks necessary. The Fed targets average annual inflation of 2 percent. So if or when the pace of price increases gets stuck far above that level, the central bank will need to raise in-terest rates to address the problem. While the Fed thinks this won’t happen until late next year, the bond market believes rates will be hiked by midyear. The responsibility for easing inflationary pressures also lies with the Biden administration. To its credit, it is scrambling to address the supply shortages, doing things like unclogging ports. But other ideas, such as releasing oil from the Strategic Petroleum Reserve, amount to distracting symbolic moves that are unlikely to have a significant effect on inflation."

"Once the true relationship between inflation and unemployment is understood, with luck and skill, a free lunch is possible."

"In most Western economies, the general relationship is not in fact between the rate of inflation and the level of unemployment, but between the rate of change of inflation and the rate of change of unemployment."

"The value of currency had come down, because Sultan Sikandar had got idols of gold, silver and copper broken and turned into coins."

"Inflation is an increase in the quantity of money without a corresponding increase in the demand for money, i.e., for cash holdings."

"Indeed, let us be frank about it. Most of our people have never had it so good."

"The acid test of monetary policy is its record in reducing inflation. Those who wish to join the debate about the intricacies of different measures of money and the implications they may have for the future are welcome to do so. But at the end of the day the position is clear and unambiguous. The inflation rate is judge and jury."

"Lenin is said to have declared that the best way to destroy the capitalist system was to debauch the currency. By a continuing process of inflation, governments can confiscate, secretly and unobserved, an important part of the wealth of their citizens. By this method they not only confiscate, but they confiscate arbitrarily; and, while the process impoverishes many, it actually enriches some. The sight of this arbitrary rearrangement of riches strikes not only at security, but at confidence in the equity of the existing distribution of wealth. Those to whom the system brings windfalls, beyond their deserts and even beyond their expectations or desires, become 'profiteers,' who are the object of the hatred of the bourgeoisie, whom the inflationism has impoverished, not less than of the proletariat. As the inflation proceeds and the real value of the currency fluctuates wildly from month to month, all permanent relations between debtors and creditors, which form the ultimate foundation of capitalism, become so utterly disordered as to be almost meaningless; and the process of wealth-getting degenerates into a gamble and a lottery. Lenin was certainly right. There is no subtler, no surer means of overturning the existing basis of society than to debauch the currency. The process engages all the hidden forces of economic law on the side of destruction, and does it in a manner which not one man in a million is able to diagnose."

"In the new we abolish interest and inflation, thereby reducing the prices of all goods and services as well as taxes by about 40%."

"As soon as interest is abolished, inflation becomes unnecessary..."

"As taxpayers we gave one of Warren Buffet's companies, in 2006, an interest-free loan of $665 million dollars, and he only has to pay half of it back 28 years from now. ...Imagine ...you bought a house in 1980 at the price in 1980. Up until now [2009] you haven't made any payments on the house, and this year you have to pay half in the... dollars you agreed to back then, no adjustment for inflation. Do you think that alone might make you a wealthy man?"

"The well-being of the British people and the health of our economy are far more important than any government's commitment to a particular strategy, but to change course now would be fatal to the whole counter-inflation strategy."

"Globalization was exerting a dis-inflationary impact."

"We are obviously all hurt by inflation. Everybody is hurt by inflation. If you really wanted to examine who percentage-wise is hurt the most in their incomes, it is the Wall Street brokers. I mean their incomes have gone down the most."

"Hyperinflation is not going to happen in this country, will never happen... The Fed putting so much money into the system is not going to create the risk of hyperinflation in the future. We have a strong independent Federal Reserve with a very strong mandate from the Congress, and they will do what's necessary to keep inflation low and stable over time."

"Tax reduction has an almost irresitible appeal to the politician, and it is no doubt also gratifying to the citizen. It means more dollars in his pocket, dollars that he can spend if inflation doesn't consume them first. But dollars in his pocket won't buy him clean streets or an adequate police force or good schools or clear air and water. Handing money back to the private sector in tax cuts and starving the public sector is a formula for producing richer and richer consumers in filthier and filthier communities. If we stick to that formula we shall end up in affluent misery."

"Inflation is always and everywhere a monetary phenomenon in the sense that it is and can be produced only by a more rapid increase in the quantity of money than in output. … A steady rate of monetary growth at a moderate level can provide a framework under which a country can have little inflation and much growth. It will not produce perfect stability; it will not produce heaven on earth; but it can make an important contribution to a stable economic society."

"Few will doubt that humankind has created a planet-sized problem for itself. No one wished it so, but we are [not] the first species to become a geophysical force, altering Earth's climate, a role previously [known to be] reserved for tectonics, sun flares, and glacial cycles. [But] We are also the greatest destroyer of life since the ten-kilometer-wide meteorite that landed near Yucatan and ended the Age of Reptiles sixty-five million years ago. Through overpopulation we have put ourselves in danger of running out of food and water. So a very Faustian choice is upon us: whether to accept our corrosive and risky behavior as the unavoidable price of population and economic growth, or to take stock of ourselves and search for a new environmental ethic."

"People are suffering. People are dying. Entire ecosystems are collapsing. We are in the beginning of a mass extinction. And all you can talk about is money and fairy tales of eternal economic growth. How dare you! Fore more than thirty years, the science has been crystal clear. How dare you continue to look away, and come here saying that you are doing enough."

"A year ago this time, the third quarter figure for 2012... we were talking about negative growth of more than 3%."

"To those who clamor, as many now do, "Produce! Produce!" one simple question may be addressed:—"Produce what?" ... What can be more childish than to urge the necessity that productive power should be increased, if part of the productive power which exists already is misapplied? Is not less production of futilities as important as, indeed a condition of, more production of things of moment? ... Yet this result of inequality ... cannot be prevented, or checked, or even recognized by a society which excludes the idea of purpose from its social arrangements and industrial activity."

"Understanding how the agricultural revolution transformed human societies was once no more than a question of intellectual curiosity. Now, though, it has taken on a more practical and urgent aspect. Many of the challenges created by the agricultural revolution, such as the problem of scarcity, have largely been solved by technology – yet our preoccupation with hard work and unrestrained economic growth remains undimmed."

"Development means a capacity for self-sustaining growth. It means that an economy must register advances which in turn will promote further progress. The loss of industry and skill in Africa was extremely small, if we measure it from the viewpoint of modern scientific achievements or even by standards of England in the late eighteenth century. However, it must be borne in mind that to be held back at one stage means that it is impossible to go on to a further stage. When a person was forced to leave school after only two years of primary school education, it is no reflection on him that he is academically and intellectually less developed than someone who had the opportunity to be schooled right through to university level. What Africa experienced in the early centuries of trade was precisely a loss of development opportunity, and this is of the greatest importance."

"Populists rarely mention these positive consequences, nor can they cogently explain how they would have sustained American economic growth and expansion of our political power without them."

"It’s usually the top income earners that reap the biggest reward and the average worker may barely notice that GDP increased and those in extreme poverty definitely wouldn’t. Lifting people out of poverty is one of the main reasons that is cited in favour of continued economic growth. In fact, in older data, whilst $2.20 might have ended up in the pockets of those under the then poverty line, in the 1980s, for every $100 added to the global economy, that shrunk to just 60 cents in the 1990s… [and] it is much worse now. All that extra growth required to lift people out of poverty is devastating for the environment."

"Today we have economies that need to grow, whether or not they make us thrive. What we need are economies that make us thrive, whether or not they grow."

"In general dictators have not done better at [economic] policies than democrats—far from it. Most dictators have ravaged their countries for personal gain. Scholars have asked whether democracy helps or hurts the economic growth of poor countries and despite many surveys, have come to no conclusive answer."

"We have spoken on many occasions of the need to achieve high economic growth as an absolute priority for our country. The annual address for 2003 set for the first time the goal of doubling gross domestic product within a decade."

"Our combined endeavour should be to ensure that the rate of economic growth is sustained and it is socially inclusive; We must also ensure that every region of the country participates in and benefits from the process of economic growth."

"It is absolutely critical that we understand this is not just a challenge, it's an opportunity, because if we create a new energy economy, we can create five million new jobs, easily, here in the United States. It can be an engine that drives us into the future the same way the computer was the engine for economic growth over the last couple of decades. And we can do it, but we're going to have to make an investment. The same way the computer was originally invented by a bunch of government scientists who were trying to figure out, for defense purposes, how to communicate, we've got to understand that this is a national security issue, as well. And that's why we've got to make some investments and I've called for investments in solar, wind, geothermal."