Wheelbarrow
In which Rat criticizes cousin's plan
Good time of day, humans!
It’s been said that «hyperinflation is not when you take a wheelbarrow of cash to the store. It’s when someone steals your wheelbarrow but leaves the money.»
Digital money makes starting and maintaining hyperinflation so much easier that, given it hasn’t started by now, it might be not coming at all.
PSA: the following rant contains esoteric opinions that aggressively attack common wisdom. Longtime readers of Rat might already be familiar with this reasoning. Read at your own risk.
The dominant narrative that views hyperinflation as «loss of monetary control» and hard-to-stop rage of the elements is highly questionable. In reality, it takes indomitable determination to keep printing in spite of obvious outcomes, and supreme logistics to shuffle all those piles of cash around. Also, most historical episodes of hyperinflation stopped literally overnight (usually through currency replacement).
The popular view that «hyperinflation leads to Hitler» is misguided, too. For example, most former Soviet bloc countries went through high inflation in early 1990ies but the subsequent developments have followed quite different patterns.
The preludes to hyperinflation have more in common. It always happens in the wake of wars or political upheavals, when political and economical elites become separate and hostile to each other, and the former uses its control of the printing press to rob the latter (see: Cantillon effect). It may end in total expropriation, or in some sort of a compromise; but, to paraphrase Milton Friedman, «hyperinflation is always and everywhere a political phenomenon».
The condition of the elite being sufficiently fragmented for one part of it to attack another is simply not present anywhere in the «nominal West». Political and economical elites are tightly integrated and, despite all the rhetoric, quite cohesive – and for robbing hoi polloi, they have lots of less radical means.
That’s the situation for now, though. When things start changing, they can change quite fast. Stay alert, and may the real values be with you.
Rat's heterodox economics are far more consistent with observable economic patterns than the conventional line manages. This reminds of the elder Galbraith's cancellation, when he observed that recessions are not only induced, but also quite welcome to powerful players.
I don't know how hyperinflation woud work in the digital era, assuming that it could work at all. But taking the wheelbarrow and leaving the cash on the ground is a good analogy of what it has often looked like. Good commentary!