"The latest report for the S&P Case-Shiller Home Price Indexes showed another small monthly gain in October for the 20-city index, up 0.37 percent on a seasonally adjusted basis or a gain of 0.05 percent when seasonal factors are not taken into account. On a year-over-year basis, prices are now down 7.3 percent and indexes for all 20 cities are shown below."...
Quotes on Inflation: Cause & Effects
"The most important thing to remember is that inflation is not an act of God, that inflation is not a catastrophe of the elements or a disease that comes like the plague. Inflation is a policy."
"Although the gold standard could hardly be portrayed as having produced a period of price tranquility, it was the case that the price level in 1929 was not much different, on net, from what it had been in 1800. But, in the two decades following the abandonment of the gold standard in 1933, the consumer price index in the United States nearly doubled. And, in the four decades after that, prices quintupled. Monetary policy, unleashed from the constraint of domestic gold convertibility, had allowed a persistent overissuance of money. As recently as a decade ago, central bankers, having witnessed more than a half-century of chronic inflation, appeared to confirm that a fiat currency was inherently subject to excess."
"Five simple truths embody most of what we know about inflation:
- Inflation is a monetary phenomenon arising from a more rapid increase in the quantity of money than in output (though, of course, the reasons for the increase in money may be various).
- In today's world government determines -- or can determine -- the quantity of money.
- There is only one cure for inflation: a slower rate of increase in the quantity of money.
- It takes time -- measured in years, not months -- for inflation to develop; it takes time for inflation to be cured.
- Unpleasant side effects of the cure are unavoidable."
"The first panacea for a mismanaged nation is inflation of the currency; the second is war. Both bring a temporary prosperity; both bring a permanent ruin. But both are the refuge of political and economic opportunists."
"The return to sound money policies is of utmost importance. Without sound money there can be no economic recovery, no prosperity, no economic cooperation, no international division of labor, no unification. Sound money is the cornerstone of individual liberty. Sound money is metallic money. It is the gold standard."
"Only two of my predecessors have come in person to call upon Congress for a declaration of war, and I shall not do that. But I say to you with all sincerity that our inflation, our public enemy number one, will, unless whipped, destroy our country, our homes, our liberty, our property, and finally our national pride, as surely as any well-armed wartime enemy."
"We have seen that government expansion of the money supply rearranges resources in society and interferes with the market's natural tendency to serve consumers according to their own priorities. Thus inflation would be objectionable even if it did not cause malinvestment and seed the ground for a subsequent depression, that is, even if it did not spawn the trade cycle.
It is incumbent on the inflationists - specifically, the incoming government officials - to explain why income distribution is a proper function of government."
"Inflation is no longer an economic catchword. To all Americans it is something as violent as a mugger, as frightening as an armed robber and as deadly as a hit man."
"The abandonment of the gold standard made it possible for the welfare statists to use the banking system as a means to an unlimited expansion of credit. In the absence of the gold standard, there is no way to protect savings from confiscation through inflation. There is no safe store of value. Deficit spending is simply a scheme for the hidden confiscation of wealth. Gold stands in the way of this insidious process. It stands as a protector of property rights. If one grasps this, one has no difficulty in understanding the statists' antagonism toward the gold standard."
"Like gold, U.S. dollars have value only to the extent that they are strictly limited in supply. But the U.S. government has a technology, called a printing press (or, today, its electronic equivalent) that allows it to produce as many U.S. dollars as it wishes at essentially no cost. By increasing the number of U.S. dollars in circulation, or even by credibly threatening to do so, the U.S. government can also reduce the value of a dollar in terms of goods and services, which is equivalent to raising the prices in dollars of those goods and services. We conclude that, under a paper-money system, a determined government can always generate higher spending and hence positive inflation."
"The expansionists are quite right in asserting that credit expansion succeeds in bringing about booming business. They are mistaken only in ignoring the fact that such an artificial prosperity cannot last and must inextricably lead to a slump, a general depression."
"Like every other tax, inflation acts to determine the individual and business policies we are all forced to follow. It discourages all prudence and thrift. It encourages squandering, gambling, reckless waste of all kind. It often makes it more profitable to speculate than to produce. It tears apart the whole fabric of stable economic relationships. Its inexcusable injustices drive men toward desperate remedies. It plants the seeds of fascism and communism. It leads men to demand totalitarian controls. It ends invariably in bitter disillusion and collapse."
"The great majority of central banks were established after 1900 to help governments spend money they didn’t have. They became engines of inflation. The largest number of runaway inflations and the worst runaway inflations have occurred since 1900."
"Probably the most famous runaway inflation was in Germany, climaxing in 1923. It has been widely blamed on reparations demanded by Germany's victorious adversaries in World War I, but reparations peaked at 11.8 percent of the government’s budget during the runaway inflation.
How, then, to account for it? Before the war, Germany had established a big welfare state, and during the war it expanded dramatically. It wasn't dismantled after the war. Germany had a financially troubled government-run pension system like our Social Security. The German government provided health insurance for millions of people. There were German government programs for 1.5 million disabled veterans. The German government bailed out municipalities. The government lavished subsidies on the arts. There were government-run theaters and opera houses. Government-owned railroads lost money. Government-run enterprises couldn’t even make money producing margarine and sausages.
This runaway inflation destroyed savings, bankrupted and disillusioned middle class Germans whom Adolf Hitler appealed to as 'starving billionaires' – they had billions of paper marks but couldn't afford a loaf of bread. Hitler emerged as a political figure to reckon with during that runaway inflation."