Inflation as a Policy

by Henry Hazlitt

In his classic little history of fiat money inflation in the French Revolution, Andrew D. White points out that the more evident the evil consequences of inflation became, the more rabid became the demands for still more inflation to cure them. Today, as inflation increases, apologists emerge to suggest that, after all, inflation may be a very good thing—or, if an evil, at least a necessary evil. The chief spokesman of this group is Prof. Sumner H. Slichter of Harvard.

Slichter’s testimony and writings overflow with fallacies. I confine myself here to three: (1) That a “creeping” inflation of 2 percent a year would do more good than harm. (2) That it is possible for the government to plan a “creeping” inflation of 2 percent a year (or of any other fixed rate). (3) That inflation is necessary to attain “full employment” and “economic growth.”

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