Somewhere along the way it’s made its way into the minds of the commentariat that arresting inflation brings with it pain, job loss, bankruptcy, “recession,” and all manner of other brutal sacrifices. The bet here is that this misconception is rooted in the ongoing myth about Paul Volcker that clueless conservatives and liberals cling to. It’s especially odd that conservatives buy into this falsehood.
It seems they’ve forgotten that the “saintly” Volcker routinely leaked against the Reagan tax cuts, not to mention that Volcker embodied the sick lie that stable money requires that real people lose their jobs, that businesses die, and all sorts of other horrible things. Conservatives claim to be growth focused, but their romantic misunderstanding of why Ronald Reagan’s economic policies worked have them embracing the absurd as though we had to suffer mightily first in order to grow later. It’s the “we had to destroy the village in order to save it” line of nonsense, economic edition.
Back to reality, this austerity-laced notion of a world without inflation is rooted in impressive economic illiteracy. Think about it. What could be harmful about a dollar the value of which is unchanging? Why would this cause a “recession”? Figure that the people are the economy, and why would they be harmed if the money they earned held its value? How could the latter harm investing in consideration of investors putting money to work with an eye on returns in dollars in the future?
About all this, please don’t embarrass yourself with an internal thought or reply that the Fed can shrink credit access. How unserious to presume that the economy shrinks or grows based on permission provided by the Fed. Credit is produced around the world, not by the Fed. The Fed produces nothing if we’re realistic. After which, to presume that a stable dollar would deter credit inflows is much less than serious. If anything, an arrest of actual inflation would prove a magnet for investors. See above about investors and returns.
All that’s been said rates saying in consideration of the latest laugh line promoted by members of the Right who once knew better. Supposedly the Fed’s growing interest in ESG has caused it to take the proverbial eye off of the inflation ball. The lack of focus on “price stability and full employment” has supposedly caused inflation. Memory says this odd assertion took flight care of former Fed higher up Kevin Warsh. It’s just not serious. And it’s not serious even though ESG is certainly ridiculous, and particularly harmful if corporations pursue it at the expense of profits.
Still, what about cheerleading what’s mindless would cause inflation to rise? The question is not a trick one. It’s just a reminder that there’s nothing particularly difficult about achieving a lack of inflation. It just requires a standard of value for the unit itself; in our case the dollar. In other words, it’s not about hitting “money supply” targets that allegedly free-market monetarists call for; a goal that would cause the most interventionist of central planners from the Soviet era to blush. It’s also not about the central planning of GDP that "market monetarists" call for, which is as ridiculous (if possible) as the previous conceit. About all this, as central planning’s 20th century failures become more and more distant, so it seems does memory of how disastrous central planning was.
With inflation, it’s once again just about maintaining a stable unit of value. Which should have alarm bells going off inside the heads of the half awake. That’s the case because the dollar’s exchange value has never been part of the Fed’s policy portfolio as is. Read the previous sentence over and over again. And if you’re still not convinced, do some digging into the 1933 and 1971 dollar devaluations. The Fed protested both. Which is the point. It lacked the power to do anything but protest.
The main thing is that there’s nothing painful about good money. To suggest there is would be the equivalent of saying a chef would suffer mightily a constant minute, degree, and tablespoon. Quite the opposite. Money is no different. It’s just a quiet measure of value that facilitates the real economic activity. The better the money, the more that the fruits of economic activity can be moved to their highest use. Yes, trade is good. Stable money facilitates trade and the savings without which there’s no economic advance to speak of.
Which means we have nothing to fear from a policy choice that would end inflation, assuming there’s inflation. The bigger fear now is basic economic illiteracy, a misunderstanding of the Fed’s policy portfolio, and the desire among policy types to focus on what is surely problematic (ESG), but that has nothing to do with inflation.
