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Inflation Is Man Made

“Food Inflation”, as they have named it, has soured to a decade’s high in India. As usual, speculation and hoarding is being blamed. False remedies are being proposed. It is time to think in terms of fundamental principles. Ayn Rand had pointed out decades back in her essay “Egalitarianism And Inflation” that “Inflation, a man made scourge, is made possible by the fact that most people don’t understand it.” If people were sound on monetary matters, government manipulation of money and credit would not have happened. Ayn Rand asks what would have happened if a person is allowed to trade in paper in a society in which gold has evolved as money. What if such a person claims that he is the best customer and expands the market? The issue, now, must be clearer than crystal to everyone. That person is making a claim on goods for nothing. That’s precisely what the Government does-Counterfeiting, a crime which is punished severely if done by an ordinary citizen. As Ayn Rand had noted, there is only one institution which has the legal power to trade by means of rubber checks: the Government. Counterfeiting is implicit theft. Of course, it is true that the Government doesn’t simply print paper money and circulate in the market. The process is more complicated. But, that doesn’t change the intrinsic picture. The fact remains that the Central Bank, a Government institution, creates money out of thin air. Ayn Rand identifies that there will be two concepts a savage thinking on the range of the moment transported into an Industrial society can’t grasp-“Credit” and “Market”. We, however, can’t make such an excuse. We are capable of long range thought. If we are to stop inflation, we should grasp these concepts and step into action.

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