Friday, August 15, 2008

Inflation Research as Propaganda (Per Bylund)

Per Bylund on why both the state and the economics profession use an obviously flawed definition of inflation:

There should be no surprise to readers of that the State statistics on inflation seek to cover up most of the problem. However, this article is not on government statistics (or propaganda, which is probably a better word for it) but on economics research on the phenomenon of inflation. Libertarians as well as Austrian economists would agree that inflation is a problem that needs to be dealt with (i.e., government needs to stop meddling with the economy), and we often tell the story of how inflation "eats up" wealth and creates imbalances in the market place while offering great opportunities for the State to increase its powers and further strengthen its hold on our society.

We often stress that the definition of inflation used by both the State and the economics profession is "incorrect" and that the "general increase in price levels" definition should be replaced by the Austrian "increase in money supply" definition. It is true that the latter is a whole lot more correct in both explaining and describing the problem while pinpointing what is really going on and how these problems could be overcome. However, it is not simply the fact that the generally accepted definition is "wrong" – it is also "evil" in that it includes quite a bit of propaganda for State control of the marketplace and the rest of society.

Read the rest, and don't miss Per's excellent commentary on the article.

No comments: