A Condensed Version of: Ex America by Garet Garrett.
Compiled and Edited by Dr. Jimmy T. (Gunny) LaBaume
Ex America, Part VI. 1951
After eight years of inflation, then World War II, and then five years of postwar inflation, the material content of life was higher than before the Great Depression. How was that possible? If we can produce no explanation of that, then we must “live by delusion and fallacy becomes wisdom.” Actually, there are several reasons.
First, “never had a crew of planners captured a galleon so rich.”
Second, the country’s power to create and recreate wealth on demand seemed inexhaustible and had been underestimated. Inflation could be absorbed because there was almost no strictly creditor class as such. Here creditors are also debtors and producers and participants in wealth creation.
Third, the New Deal’s inflation was primarily political and not economic.
As John Maynard Keynes once said, “While the process (of inflation) impoverishes many it actually enriches some.” Understanding the political meaning of that is the key to using inflation for the political ends of redistribution of national income and revolutionary social change. Inflation will be planned so as to enrich the greatest possible number of people and therefore, the revolution will be popular.
So, the New Deal’s initial targets were farmers, organized labor, and the low income brackets. If you can enrich these groups you will have increased the buying power of about two-thirds of the population. Then, as they spend their money prices will rise causing a temporary boom in business. If that happens, then the businessmen and bankers will be halfway with you. From time to time they will worry about inflation and call for stopping it. At that point, you then threaten them with deflation. They will respond that they do not want that but that “we need to stop it here.” And they will be in favor of employing the resources of government (even a little more inflation) to prevent deflation because it is such a bitter pill to swallow.
To the farmers, the New Deal gave cheap credit, price supports, and “parity” (if other prices rise, farm prices will be raised by more subsidies.)
To organized labor it gave exemption from the antitrust laws and the legal right to a labor monopoly (compulsory unionism) whereby a man has to pay for the right to work.
To the low-income group it gave social security. A problem that is yet to be solved is how to maintain this bauble as prices rise.
To be continued
The Essence of Liberty Volume I: Liberty and History chronicles the rise and fall of the noble experiment with constitutionally limited government. It features the ideas and opinions of some of the world’s foremost contemporary constitutional scholars. This is history that you were not taught at the mandatory government propaganda camps otherwise known as “public schools.” You will gain a clear understanding of how America’s decline and decay is really nothing new and how it began almost immediately with the constitution. Available in both paperback and Kindle versions.
You might be interested in the other two volumes of this three volume set: The Essence of Liberty Volume II: The Economics of Liberty and The Essence of Liberty Volume III: Liberty: A Universal Political Ethic.