The nation abounds in chatter about inflation these days, most of it badly informed if not deliberately misleading.
But there is some sound writing, and I recommend this AIER essay by Peter Calcagno and Edward Lopez. They argue that if you want to understand the problem, “look to Harvey Road, not Pennsylvania Avenue.” The reference is to the residence of John Maynard Keynes, whose prescription for government economic management steered us wrong in the 1930s and still bedevils us.
Keynes liked inflation as a means for the state to extract wealth from producers for its purposes and liked it especially because, he wrote, “not one man in a thousand can see what is going on.” Unlike taxation, which people see and object to, deficit spending and subsequent money creation through a central bank takes place covertly and is easily blamed on others.
Calcagno and Lopez praise the analysis of James Buchanan and Richard Wagner in their book Democracy in Deficit, which gets at the root of the problem, namely the insatiable appetite of our politicians for money to spend on all the things they like (mostly because they help get them re-elected).
Here is Calcagno and Lopez’s conclusion: “Taking Buchanan and Wagner’s Democracy in Deficit seriously means putting the focus on political morality and institutional rules. These rules restrain discretion in monetary policy and limit both the scope and scale of fiscal policy. AIER’s Alex Salter and others are right that we need Milton Friedman back now more than ever. But even more so, we need Buchanan and Wagner to take front and center in the political and economic discussion.”