Lessons from the Great French Inflation

Richard Ebeling emails:

Dear Bob,

I have a new article on the news and commentary website, “EpicTimes,” on “Lessons from the Great French Inflation.”

Governments and central banks around the world continue to expand the quantity of money in the banking system and manipulate interest rates in attempts to “stimulate” employment and output.

Such misguided policies always have led to disastrous price inflation and economic ruin, often exacerbated by government attempts to hide the effects resulting from their own policies through price controls.

One of the most famous historical examples of this was during the French Revolution. Government extravagance during under the French kings had led to annual budget deficits, mounting debt, and special interest intrigues by those who lived off government largess.

It brought about the French Revolution during which a mountain of paper money was created to fund “make works” projects, subsidize the demands of “the masses,” and wage war. Its end result was monetary ruin the harmed the weak and the poor the most.

It was matched by the insanity of an intricate web of price and wages controls in the name of “fighting inflation” that brought about shortages, food riots, and a swarm of bureaucrats and regulators who held the power of life and death over those who violated the government edicts.

As the Austrian-born economist, Joseph A. Schumpeter, once pointed out:

“Louis the XV was a most enlightened monarch. Feeling the necessity of stimulating expenditure he secured the services of such expert spenders Madame de Pompadour and Madame de Barry. They went to work with unsurpassable efficiency. Full employment, maximum resulting output, and general well-being ought to have been the consequence. It is true that instead we find misery, shame and, at the end of it all, a stream of blood. But that was a chance coincidence.”

http://epictimes.com/article/332558/lessons-from-the-great-french-inflation

Best Wishes,
Richard