Problem Of Inflation

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Problem Of Inflation

Inflation also causes problems in accounting. You are no longer sure what your earnings are worth. And, in making contracts, you don't know what your costs will be. There are also serious international complications; when different countries have different rates of inflation, exchange rates will be unstable. So we have never thought we should accept inflation. Economists, We repeat, should be held to high standards of performance. They should be made to deal with both unemployment and inflation and be paid accordingly. They should not be allowed to escape into failure.

Could inflation, under certain circumstances, still fin away? Yes. But no one really knows how great the danger is. In the affluent countries people, at any time, have a large amount of spendable assets in their possession - bank deposits, savings deposits, cashable government bonds, currency tucked away under the floor or in the mattress. Should sharply rising prices ever persuade them that these assets were going to be worthless in the future, there could be a rush to spend. The result would be runaway inflation. A lesser inflation could cause a total one. Because we don't know how great the danger is, we shouldn't take risks.

In the later stages of the 1922-3 inflation, people lost all confidence in the purchasing power of the Reichsmark. They rushed to get rid of their money and other spendable assets, sometimes within minutes of receiving them. This was a cause of the inflation and a result of the inflation.


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The Socialist Countries

From brief observation, We would judge that the Chinese maintain a very close control both on theft wages and on their total demand.

Recently, you may have seen, they unfroze wages and allowed the first increase in fourteen years.

That kind of control over the work force could turn a lot of old-fashioned capitalists to Communism.

And unemployment is always less evident in an agricultural country; people divide up what work there is and work less hard.

Disguised unemployment replaces the open statistical unemployment of the industrial economy and the factory system.

The... see: The Socialist Countries


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