“Inflationary Vice”

[ndrosen]

There’s a good article by Theodore Dalrymple about “Inflationary Vice”, arguing that inflation has bad effects on the character of people in society. Frugality comes to be seen as foolish, and as the value of money cannot be relied upon, people become worried and greedy to grab more to avoid being poor in their old age. Meanwhile, some lucky debtors find the value of their debt melting away, and asset inflation confers unearned riches on some people fortunate enough to own the right assets, houses being mentioned. Other people become dependent on welfare, and see no prospect of being able to afford assets for themselves by working and saving.

This is sound and reasonable as far as it goes, and applies to inflation caused by printing too much money. I might add that it also applies to the inflation of land prices. Some lucky people, whether intentional land speculators or ordinary people who bought homes in the right places at the right times, become rich. Others see no hope of ever being able to afford homes of their own. Society has more inequality than is healthy, and inequality for the wrong reasons.