Everyone loves an early inflation. The effects
at the beginning of an inflation are all good.
There is steepened money expansion, rising
government spending, increased government
budget deficits, booming stock markets, and
spectacular general prosperity, all in the
midst of temporarily stable prices. Everyone
benefits, and no one pays. That is the early
part of the cycle. In the later inflation, on
the other hand, the effects are all bad. The
government may steadily increase the money
inflation in order to stave off the later
effects, but the later effects patiently wait. In
the terminal inflation, there is faltering
prosperity, tightness of money, falling stock m
arkets, rising taxes, still larger government
deficits, and still roaring money expansion,
now accompanied by soaring prices and
ineffectiveness of all traditional remedies. Ever
yone pays and no one benefits. That is the
full cycle of every inflation.Jens O. Parssons
