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On 'Taming' Inflation

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I was struck by this headlline to this story [2] in today’s New York Times about the nomination of Ben Bernanke to succeed Alan Greenspan as Chairman of the Federal Reserve Board of Governors:

First on To-Do List: Tame Inflation

Although I understand that changes in the demand for money, as well as innovations by financial institutions, complicate matters somewhat, the looming truth remains that inflation is not like a lion needing taming.  It is, instead and overwhelmingly, a product of excessive monetary growth.

Because the Fed largely controls the supply of U.S. dollars, the Fed’s role isn’t to "tame" inflation.  Rather, the Fed’s role simply is not to generate it.  It can achieve this goal very, very easily — namely, by not increasing the money supply.

This is no difficult task.

But the popular account of inflation still portrays inflation not as something caused by excessive monetary growth but as some alien-like demon, or animal spirit, that visits us from time to time and needing "taming" by smart and brave central bankers.

Too often, things that are simple — for example, not causing inflation — are treated as though they are challenges of the first rank, while things that are impossibly complicated — for example, government provision of health care — are treated as though they are quite easy to achieve.

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