What do you think?
Rate this book
Inflation: What It Is, Why It's Bad, and How to Fix It
Inflation: What It Is, Why It's Bad, and How to Fix It explains what's behind the worst inflationary storm in more than forty years--one that is dominating the headlines and shaking Americans by their pocketbooks.
The cost-of-living explosion since the COVID pandemic has raised alarms about a possible return of a 1970's-style Great Inflation. Some observers even fear a descent into the kind of Weimar-style hyperinflation that has torn apart so many nations. Is this true? If so, what should be done? How should we prepare for the future?
Inflation answers these and other questions in an engaging discussion that draws on the singular expertise of Steve Forbes, chairman of Forbes Media, acclaimed for his insights on money and the economy; Nathan Lewis, internationally renowned expert on money and taxation; and author and journalist Elizabeth Ames.
The authors say that today's problems can be solved by discarding longstanding beliefs that helped bring on the current crisis. They include the notion that central banks can create prosperity through artificially creating money out of thin air, and also that economic stability requires a little inflation. Such ideas for decades have been Holy Writ in official Washington. Inflation shows why they are misguided. The book also explains why the current rage for heedless money-printing advocated by left-wing advocates of so-called Modern Monetary Theory is likely to lead the nation--and the world--down the road to disaster.
Packed with examples from the headlines and from history, Inflation is a unique, real-world exploration of the subject that addresses everyday concerns of Americans under siege by rising prices, including steps you should take to protect your wealth.
Inflation is essential listening for everyone seeking to navigate these tumultuous times.
The cost-of-living explosion since the COVID pandemic has raised alarms about a possible return of a 1970's-style Great Inflation. Some observers even fear a descent into the kind of Weimar-style hyperinflation that has torn apart so many nations. Is this true? If so, what should be done? How should we prepare for the future?
Inflation answers these and other questions in an engaging discussion that draws on the singular expertise of Steve Forbes, chairman of Forbes Media, acclaimed for his insights on money and the economy; Nathan Lewis, internationally renowned expert on money and taxation; and author and journalist Elizabeth Ames.
The authors say that today's problems can be solved by discarding longstanding beliefs that helped bring on the current crisis. They include the notion that central banks can create prosperity through artificially creating money out of thin air, and also that economic stability requires a little inflation. Such ideas for decades have been Holy Writ in official Washington. Inflation shows why they are misguided. The book also explains why the current rage for heedless money-printing advocated by left-wing advocates of so-called Modern Monetary Theory is likely to lead the nation--and the world--down the road to disaster.
Packed with examples from the headlines and from history, Inflation is a unique, real-world exploration of the subject that addresses everyday concerns of Americans under siege by rising prices, including steps you should take to protect your wealth.
Inflation is essential listening for everyone seeking to navigate these tumultuous times.
193 pages, Kindle Edition
First published April 19, 2022
135 people are currently reading
365 people want to read
Ratings & Reviews
Friends & Following
Create a free account to discover what your friends think of this book!
Community Reviews
Displaying 1 - 30 of 51 reviews
November 1, 2022
Gold has a lot of bad rap, but none of it is warranted, as Forbes shows. Forbes goes through the misconceptions about gold-backed currency and how the road to prosperity includes a return to the gold standard.
May 18, 2024
Oh wow. Hands down, that is the most terrible econ book I have ever read.
Although it boasts with alluring subtitle how to fix inflation, the book didn't present a single sound argument.
The entire goes like: bla-bla-bla... recession. Bla- bla.. pack some gold. Bla-bla-bla, little history of how Neron smashed Rome's economy... Bla-bla-bla inflation is terrible... Fed doesn't do anything, but continues to deflate US dollar.
Well, i mean "duh". We've known that for a quite a while. Would you care to propose some valid solutions on how to juggle several things at once: keeping a currency stable and simultaneously hold an economy falling into a stagnation and let's not forget about tools to intervene a certain areas of the economy when it gets "pretty miserable down there".
There is chapter called "How to End the Malaise?" It felt I had waited eternity and some when reached to this chapter because I had high hopes that I would read some compelling ideas about how to run monetary policy. "Your expectations are your issues" they say. The chapter just carried on retelling dubious articles from various sources.
The end of rant.
Although it boasts with alluring subtitle how to fix inflation, the book didn't present a single sound argument.
The entire goes like: bla-bla-bla... recession. Bla- bla.. pack some gold. Bla-bla-bla, little history of how Neron smashed Rome's economy... Bla-bla-bla inflation is terrible... Fed doesn't do anything, but continues to deflate US dollar.
Well, i mean "duh". We've known that for a quite a while. Would you care to propose some valid solutions on how to juggle several things at once: keeping a currency stable and simultaneously hold an economy falling into a stagnation and let's not forget about tools to intervene a certain areas of the economy when it gets "pretty miserable down there".
There is chapter called "How to End the Malaise?" It felt I had waited eternity and some when reached to this chapter because I had high hopes that I would read some compelling ideas about how to run monetary policy. "Your expectations are your issues" they say. The chapter just carried on retelling dubious articles from various sources.
The end of rant.
August 26, 2022
Instead of organizing my thoughts into a coherent and cohesive review, I decided to merely post a collection of my highlights from Inflation. These are (at least mostly?) in chronological order and provide an at-a-glance overview of the book. Nevertheless, I'd highly recommend reading Inflation; there's much more to it than this.
As it was only published last year, it's still very up to date and pertinent. I learned a great deal from this book, and while I have ruled out economics as a future career, I am interested in reading more on the topic. Inflation is an excellent starting point for teens and up. (It did take me a little while to read, as usual for nonfiction. It also could be a bit dry at times, but definitely worth it.)
This book is pro-capitalism, pro-gold standard, and pro-small government. As I also hold firmly to these beliefs, I heartily enjoyed it and would recommend it. If you do not fall in to any or all of those three categories, I'd suggest reading this book with an open mind. The authors do an excellent job of arguing for all three; perhaps you will be convinced.
All quotes are italicized and from Inflation: What It Is, Why It's Bad, and How to Fix It by Steve Forbes, Elizabeth Ames, and Nathan Lewis.
The ultimate lesson of history— and of this book—is that no nation has ever gotten rich by eroding the value of its money.
Inflation, as most people think of it—and as we refer to it here—is not simply price increases. It’s about the distortion of prices that results from the debasement of money.
[The] philosopher John Locke famously called currency devaluation a “public failure of justice” that gives “one man’s right and possession to another.”
In a normal economy, businesses fail. However, people learn from such setbacks. The players that survive are more efficient and usually do things better. That’s how knowledge is acquired and industry—and society—advances.
By favoring “market incumbents” over new ventures, directing capital into unproductive or protective investments instead of into growth-producing innovation—not to mention enabling government bloat—inflation slowly suffocates an economy.
What If We Had No Inflation?
The answer is that we’d be a lot wealthier. If the nation had the same growth rate today as we did in the 1950s and 1960s, per capita income would be 72 percent higher. Americans would be paid in dollars with more spending power. The economy would be at least 50 percent bigger. Investment would have been directed at high-value opportunities, rather than being misdirected due to confused, tax-distorted capital markets. Americans would be producing $10 trillion more goods and services than we do today.
Sooner or later, inflation leads to more government control. The scenario is fairly standard: central banks devalue money; prices shoot up. Governments look for ways to tamp down inflation by keeping people from spending. They also respond with price controls, capital controls, higher taxes. Governments grow larger and often impose more constraints.
Can America tame its increasing inflation? The answer is that we can, and we can do so quickly. The financial stability and the vibrant growth of the 1980s and ’90s is possible once again if the US reawakens to the importance of a sound dollar, and has the political will to keep its value stable.
There is no such thing as price stability, even during times of little or no inflation. Prices are the market’s system of conveying information about supply and demand. They rise and fall all the time in a healthy economy.
As it was only published last year, it's still very up to date and pertinent. I learned a great deal from this book, and while I have ruled out economics as a future career, I am interested in reading more on the topic. Inflation is an excellent starting point for teens and up. (It did take me a little while to read, as usual for nonfiction. It also could be a bit dry at times, but definitely worth it.)
This book is pro-capitalism, pro-gold standard, and pro-small government. As I also hold firmly to these beliefs, I heartily enjoyed it and would recommend it. If you do not fall in to any or all of those three categories, I'd suggest reading this book with an open mind. The authors do an excellent job of arguing for all three; perhaps you will be convinced.
All quotes are italicized and from Inflation: What It Is, Why It's Bad, and How to Fix It by Steve Forbes, Elizabeth Ames, and Nathan Lewis.
The ultimate lesson of history— and of this book—is that no nation has ever gotten rich by eroding the value of its money.
Inflation, as most people think of it—and as we refer to it here—is not simply price increases. It’s about the distortion of prices that results from the debasement of money.
[The] philosopher John Locke famously called currency devaluation a “public failure of justice” that gives “one man’s right and possession to another.”
In a normal economy, businesses fail. However, people learn from such setbacks. The players that survive are more efficient and usually do things better. That’s how knowledge is acquired and industry—and society—advances.
By favoring “market incumbents” over new ventures, directing capital into unproductive or protective investments instead of into growth-producing innovation—not to mention enabling government bloat—inflation slowly suffocates an economy.
What If We Had No Inflation?
The answer is that we’d be a lot wealthier. If the nation had the same growth rate today as we did in the 1950s and 1960s, per capita income would be 72 percent higher. Americans would be paid in dollars with more spending power. The economy would be at least 50 percent bigger. Investment would have been directed at high-value opportunities, rather than being misdirected due to confused, tax-distorted capital markets. Americans would be producing $10 trillion more goods and services than we do today.
Sooner or later, inflation leads to more government control. The scenario is fairly standard: central banks devalue money; prices shoot up. Governments look for ways to tamp down inflation by keeping people from spending. They also respond with price controls, capital controls, higher taxes. Governments grow larger and often impose more constraints.
Can America tame its increasing inflation? The answer is that we can, and we can do so quickly. The financial stability and the vibrant growth of the 1980s and ’90s is possible once again if the US reawakens to the importance of a sound dollar, and has the political will to keep its value stable.
There is no such thing as price stability, even during times of little or no inflation. Prices are the market’s system of conveying information about supply and demand. They rise and fall all the time in a healthy economy.
May 14, 2022
Not a bad book, just tedious. I’m an economist by education and would have preferred a more rigorous discussion of inflation, but I realize this book wasn’t written for people like me. It does tend to oversimplify the entire topic and centers around a wistful (at best) desire for a return to non-fiat currency. On the plus side, it is infinitely more comprehensible and logical than any of the ridiculous books on Modern Monetary Theory.
It’s worth noting that the book was written prior to the current (Q1/Q2 2022) levels of inflation in the US.
I would have rated this lower were it not for the final two chapters, “What about your money” and “The way forward” which provide useful suggestions for coping with and recovering from inflation.
It’s worth noting that the book was written prior to the current (Q1/Q2 2022) levels of inflation in the US.
I would have rated this lower were it not for the final two chapters, “What about your money” and “The way forward” which provide useful suggestions for coping with and recovering from inflation.
This entire review has been hidden because of spoilers.
May 19, 2022
Amazing book! You will never think about money the same way again after reading this.
Bottom line up front: inflation comes from a devaluation of currency. This can be temporary as a result of natural disasters and disruptions in supply chain or it can be permanent when flawed policy creates hyperinflation and the government prints money to pay for itself.
The answer? Ideally, a return to the gold standard. An alternative, adherence to the Bretton Woods gold standard where circulation of dollars is tied to the price of gold.
Bottom line up front: inflation comes from a devaluation of currency. This can be temporary as a result of natural disasters and disruptions in supply chain or it can be permanent when flawed policy creates hyperinflation and the government prints money to pay for itself.
The answer? Ideally, a return to the gold standard. An alternative, adherence to the Bretton Woods gold standard where circulation of dollars is tied to the price of gold.
March 27, 2024
Great book on Inflation! Must read!
January 15, 2024
Money is like everything else in an economy. It loses value when there's too much of it. 2019/12-mid2021 money supply exploded 35% exceeding 20 trillion. With QE, it’s harder to go back to the 60% stock & 40% bond risk vs return. In order to Post-Covid exacerbates M society making it harder to maintain a healthy portfolio. Gov’t subsidies drugged alienates people unwilling to return to the workforce. Hardworking middle income family with kids in private school and cram classes struggles the most under inflation.
Inflation financed by Federal Reserve, the US central bank, thru treasury bonds that it pays for with money it created out of thin air
Larry Summers Keynesian economist sounded the 1st alarm that 70’s stagflation might return
Isaac Newton a physicist also a banker. As head of British Royal Mint, together with philosopher John Locke, reformed the coinage 1690s making it more uniform and keeping its value unchanged. Later 1717, he fixed British pound to gold at £3.89 for more than 200yrs
Ch.1 What Is Inflation?
Too much money chasing too few goods
Nixon Shock - wage & price control and tariffs on imports destroying Bretton Woods monetary system, ending US dollar tie with gold standard making current major currencies value not set, but depend on the whims of currency traders and the policies of central bankers
CPI does not measure certain expenses, most notably health insurance.
Dollar purchasing power has reduced 98% since before Nixon Shock
What inflation is vs. what ppl think it is
A dramatic change in the CPI
Price increases over time when demand exceeds supply (demand-pull inflation) or when cost of supplies increases (cost-push inflation)
A consequence of Class Struggle?
The truth about prices, it's not simply rising prices, it's distortion of prices when money loses value
House value increase slowly giving "money illusion" is in fact low-grade inflation
Dollar is compared to CPI and other indicators such as commodity price, other major currency but gold with estimate 7 billion ounces mined is the most stable indicator
Shrinkflation - reducing product instead of price increase
Money is a measure of worth
Tether - one of the stable-coins, crypto that pegged to a specific asset like dollar, gold or commodities
Ch.2 Not-So-Great Moments in Inflation History
2nd-Oldest Profession
the currency debasement, 7B.C. Lydia 1st coin was with cheaper metal mixed with gold or silver
Nero "Fiddles" with Rome's Money
37-mid 4th c. debasing into hyperinflation and back to barter and lost writing, entering Dark Ages
China inflates “the bark of trees”
from 9-mid 15th c. China paper money debasing into hyperinflation and next 500yrs back to copper/silver coinage
EU mercantilism & inflationism
16th c. King Henry VIII Great Debasement causing hyperinflation with his daughter Queen Elizabeth I restoring silver coinage that remained unchanged for centuries
Inflation that sinks the Spanish empire
Revenue-hungry gov’t debasing silver coinage and lost power to France
“Après Moi, le Deluge” of French Hyperinflation
Late 17th c. King Louis XIV devaluation & spending exploiting riches of the New World thru Mississippi Company by printing paper money, then exploration of Louisiana failed, shares collapsed, back to silver
Not Worth a Continental (worthless)
New World colonies, 1775 American Revolution and Franch Revoluton all abused paper money which led to hyperinflation. Napoleon Bonaparte retored order by creating new franc linked to gold until 1914. Enlightenment thinker John Locke, Adam Smith, Alexander Hamilton gave up fiat paper to embrace sound and stable dollar.
Money printing doesn't automatically mean inflation
Swiss Franc, population less than 9mil, 8 times more money per capita than Canada with a population 4 times of Swiss. Franc being the most stable currency, it's in high demand, thus Swiss print money to avoid Franc value from rising.
A Vibrant Economy, Booming Money Supply with No Inflation
1775-1900 US dollar value increase by 163 times but no change is dollar's value vs. gold suppoerted by strong economic expansions.
No Oversupply, But a Currency Fail
FDR 1932 Gold Program increased gold from $20.67 per troy to $35 to fight Great Depression which devalued dollar by 41%. Thai baht & Russian rubble tumbled in late 1990's due to loss of faith and confidance. HK dollar pegged to US dollar survived handover of HK
Supply, Demand, and Loss of Faith
Anything suggests currency in danger of losing value
Country faces a calamitous military defeat
Reckless gov't spending raises the possibility of a dramatic expantion of the money supply or an outright currency devaluation
The Superstorm of Hyperinflation
Steve Hanke economist hyperinflation is inflation at a rate of 50% per month for an extended period of time.
Adam Fergusson - When Money Dies, 1923, German Weimer hyperinflation 30,000%/month. Prices doubles every 3-4 days
Why Hyperinflation isn't just More Inflation
Inflationism in the Modern Era -> Rise of Keynes -> William Phillips "Phillips Curve" linking prosperity and full employment to heightened levels of inflation -> Nixon & Fed Chair Arthur Burns "easy money" debasing with sound money and Bretton Woods gold standard -> Great Inflation of 70' -> Keynesiamism fell out of favor and Phillips Curve disproved by Nobel prize winning economists but bad idea stayed on with US dollar as fiat money floating currency. -> post COVID inflation
The Failures of the Keynesian Fed
1913 after the Great Panic 1907, Fed was set up to serve as
"a lender of last resort" to prevent bank runs that caused the Great Panic.
to provide liquidity to banks to meet the seasonal case needs of America's large agricultural economy
central bank to protect dollar stability and ward off inflation
The Employment Act 1946 empower Fed to intervene inflation and employment
70' Congress required Fed to adopt Keynesian "dual mandate" to acheive "stable prices and full employment"
If downturn, pump in cheap money created out of thin air thru OMOs "open market operations": buying secrurities, mainly gov't bonds/treasuries from investment banks that are primary dealers of securities.
If forthy, tighten up, lenders buy bonds back from gov't and money goes back to Feds and disappears
12 regional Fed banks
owning 1/4 of nation's debt
Washington relies on constant flow of 0% interest rate "free loans" from Fed bond buying/money creation with 90 billion/yr interest rate going back to Treasury creating vicious cycle in need of more interest-free loans
Previously, open market operations were to ease or raise short-term rates. Now, QE Quantitative Easing with long-term low rates Treasuries and mortgage-backed securities (easy money what seemingly started housing bubbles in the first place)
Basel III, adopted 2010 to prevent 2008 GFC Global Financial Crisis caused by housing bubble, to require central banks to increase their reserves. Feds printing more money paying interests on balances with trillions in Fed "deep freeze"
deep freeze is why QE printing prodigious amounts of money w/o going into hyperinflation
2008-2021 US monetary base increased from 830 billion to 6 trillion creating gargantuan deficits
Sterilizing Money Creation via Reverse Repos
reverse purchase agreement - transaction that involves a short-term (often overnight) purchase of securities. The securities are then sold back to the initial party at a higher price
Pouring in water in one end and taking out water on the other end, preventing increase in money supply.
Why Can't We Just Print More Money
MMT Modern Monetary Theory - Socialist Progressive - proponent Biden admin, Stephanie Kelton
Japan, holding 50% gov't bonds, twice the federal debt held by Fed, is doing fine
Main concern is inflation but can be controlled by more gov't interventions and taxes
What's new is old, MMT is unshackling gov't turning it into bloated monster
Why Inflation is Bad
You can't devalue your way into prosperity
inflation will work initially creating jobs but rise in cost of living will hurt common ppl
Inflation's Monstrous Unfairness
Inflation as stealth tax, acknowledged by Keynes, to confiscate secretly and unobserved wealth of their citizens
Inflation Inequality
prices increase more for basic needs than luxury items measured by indicators like Gini coefficient (看股基本)
Mark Skousen, siting Ludwig von Mises, points out that those who most benefit are generally 1st recipient of Fed-created money (Wall Street, big banks, commercial interests & stock market investors)
Gov’t benefit from tax from higher wages
John Locke - currency devaluation a “public failure of justice” that gives “one man’s right and possession to another.”
An Enabler of Debt
Public fianance destroyed, only available at usurious interest rates and short maturity of less than a year
The Further Distortion of artificail low to zero interest rate brought by central baks, Kaynes on steroid panalize risky cash strapped small borrowers while benefiting big players: Apple taking out loans tens of billions free money to buy back its own stock while it has close to 100 billion cash on hand.
Biggest debtor is US gov't, 29 trillion early 2021
Josef Joffe: Inflation is the best way to make the public debt melt way and keep the floodgates open. Downside being devalued dollars making masses poorer and more dependent on gov't.
Markets Misled by the Money Illusion
The Energy Shortage that wasn't. 70's energy crisis blamed on Arab Oil Embargo is in fact currency crisis caused by Money Illusion.
After Nixon Shock, OPEC: member countries of OPEC will take the necessary steps to adjust crude oil posted prices accordingly if floating dollar dropped in value on foreign exchange.
Inflation's Funhouse Mirrors
When money davalues, it goes into hard assets, home owners are big winners during 70's and "dot com bubble burst" inflation with Fed's cheap money encouraging banks to give away mortgages. Loosened lending standards making loans available to higher-rish, subprime borrowers which led to 2005 subprime mortgage crisis
Gone the 20% downpay, "stated income loans"/"no-doc"/"liar loans" became common, then interest rate rose, 10 million ppl lost theirhomes, Lehman Brothers and Bear Stearns collapsed, Merrill Lynch then largest insurer sold, Citibank taken over by gov't, then 2008 Great Recession
Good Bubbles and Bad Bubbles
Fake inflationary signals misguide investment into nonproductive wealth preservation such as gold bullion. German Weimar piano, USSR stockpile bricks. John Hanke: You had a brick acct
Taxes are Inflated, Too
Bracket creeep - ordinary citizens socked with taxes meant for the rich, no inflationary adjustments. Higher pay was in inflated dollars taxed not on gain but inflationary illusions
Where This Leads: Stagflation
Favoring market incumbants over new ventures
murderous capital gains taxesfewer start-ups, abandoned housed
The Slow Stagnation of "Low-Level Inflations"
The Rise of the Regulatory State, more gov't wage, capital, price control keeping ppl from spending
Scandal of money, money creation + zero interest borrowing creating gov't dependency on social welfare, negating American dream
Trust Unravels
Looking for scapegoats, devaluing others
Society Debased
Morality Corrupted, strongman & dictators arise
How to End the Malaise
Pressuring ppl to spend less money or getting biz to lower prices do not work
Argentina: Capital control fail
Turkey: Cracking Down on "Food Terrorists" price control fail
Venezuela: More Money Printing
Nixon Shock: Price Explode, Gerald Ford PR "WIN" Whip Inflation Now didn't work, nor did Jimmy Carter
The Myth of Inflation Fighting thru "Austerity"
IMF thought devaluation in Thai baht was result of gov't deficit recommended risen taxes but brought disaster
IMF recommended austerity caused Russian Currency Disaster rubles valueless back to bartering
Why the "Fixes" fail
wage & price controls are inflation in reverse creating shortages
currency control a stopgap measure works in the beginning in the end create black market
austerity brings recession but like bloodletting cures disease but patient dies
central bank buys its own currency with dollar or euro end up dumping back its own currency, oversupply con’t
IMF package has political strings attached
Only way to fix inflation is to shrink currency oversupply
Gov’t buy back its own currency by foreign exchange and no sterilization
Selling assets typically gov’t bonds in exchange of domestic currency
pro-market policies
Money Miracles in Postwar JP & DE
Joseph Dodge outlawed gov't deficit spending Deutschmark linking to gold-based dollar replacing Reichsmark & gov’t no spending unless it's tax revenue & pairing with tax cut, economy soar 50'-60', eventually became core of euro
Joseph Dodge gov't spending ban and Yen linking to dollar + tax cut
How Paul Volcker Whipped 70's Stagflation
Loose commodity standards w/ Reagan’s free-market policies kept dollar stable.
Greenspan succeeded Volcker refined Volcker’s strategy and tamed dollar volatility further with The Great Moderation
Gold: The Way Forward
classical gold standard 1870-1914WWI
gold exchange standard after WWI
gold backed currency
gold price system
21st C. Gold Standard
dollar fixed to gold at a particular price based on 5-10yrs avg, marked up to insure against deflation
Fed using openarket operations to tie closely to gold pricing like currency board
supply of money contract when weak and expand when strong
1% fluctuation against gold like Bretton Woods
Fed no more dual mandate undermining growth and job creation
Fed can still set interest rate above free market rates when banks borrow money from the Fed at its discount window so banks don’t get cheap money to lend out like British pond end of 19th c.
What About Your Money
Price distortion making it hard to hedge against inflation
CPI basket of goods not being updated as often as it should, doesn’t incl health insurance, ignores consumer behavior in response to inflation
The CPI Inflation Calculator tells how much dollar’s purchasing power has dropped over a stretch of time (almost never increases)
PCE though incl health insurance but still flawed as it reflects symptoms of inflation not the illness, reading is slow to react by months
Best indicator
Gold Price
Commodity Prices oil silver wheat but lag gold Wall Street Journal / Fox Business/ Bloomberg/ CNBC
CRB Commodity Research Bureau Index
Bloomberg Commodity Spot Index
S&P GSCI Goldman Sachs Commodity Index
Fed Federal Funds rate, rate that influencing how much financial institutions can charge borrowers and the amount of money flows into the economy.
Low Federal Funds rates signals Fed is creating too much money.
Fed paying high interest on money bank parked at Fed signals inflation
Reading Fed's Balance Sheet
Central bank's assets and liabilities are published on its
“statistical release” (H.4.1) every Thurs. on Fed website
ttl currency in circulation
what Fed holds in securities, gold, foreign exchange & other assets
info on reverse repo that mask money expansion: “Factors Affecting Reserve Balances of Depository Institutions” and then “reverse repurchase agreements”
“Money Stock Measures” (H.6) more info on money supply
the M’s
M1 most liquid form of money: currency, traveler’s checks, demand deposits, savings deposits and other deposits against which checks can be written
M2 incl M1 + time deposits less the $100,000 & balances in retail money-market mutual funds
M3 incl M2 + large time deposits, institutional money market funds, short-term repurchase agreements (repos) & larger liquid assets
M0 most important to inflation “monetary base” “base money” currency in circulation + bank cash reserves
Velocity of money: website St. Louis Federal Reserve
Gov’t debt
Its ratio to GDP?
How much gov’t is borrowing to pay interest on its bonds?
Congressional Budget Office www.cbo.com for gov’t finance info
Should I Rebalance My Portfolio?
conventional 60/40 ratio 60% stock & 40% bond supposedly best risk vs return
With inflation, fixed return like bond should be avoided, real estate and precious metals are preferable
Stocks appreciation with ppl spend rising wages and big corp raking revenues from gov't created money but if factor in inflation it's not always growth
Physical commodities not for daily trader unless you have warehouse ready to take dlivery
Exchange Traded Funds with Commodities futures investor can trade but highly speculative cuz one effectively taking on debt
Commodity-Based Equities - commodity producer stock
Inflation financed by Federal Reserve, the US central bank, thru treasury bonds that it pays for with money it created out of thin air
Larry Summers Keynesian economist sounded the 1st alarm that 70’s stagflation might return
Isaac Newton a physicist also a banker. As head of British Royal Mint, together with philosopher John Locke, reformed the coinage 1690s making it more uniform and keeping its value unchanged. Later 1717, he fixed British pound to gold at £3.89 for more than 200yrs
Ch.1 What Is Inflation?
Too much money chasing too few goods
Nixon Shock - wage & price control and tariffs on imports destroying Bretton Woods monetary system, ending US dollar tie with gold standard making current major currencies value not set, but depend on the whims of currency traders and the policies of central bankers
CPI does not measure certain expenses, most notably health insurance.
Dollar purchasing power has reduced 98% since before Nixon Shock
What inflation is vs. what ppl think it is
A dramatic change in the CPI
Price increases over time when demand exceeds supply (demand-pull inflation) or when cost of supplies increases (cost-push inflation)
A consequence of Class Struggle?
The truth about prices, it's not simply rising prices, it's distortion of prices when money loses value
House value increase slowly giving "money illusion" is in fact low-grade inflation
Dollar is compared to CPI and other indicators such as commodity price, other major currency but gold with estimate 7 billion ounces mined is the most stable indicator
Shrinkflation - reducing product instead of price increase
Money is a measure of worth
Tether - one of the stable-coins, crypto that pegged to a specific asset like dollar, gold or commodities
Ch.2 Not-So-Great Moments in Inflation History
2nd-Oldest Profession
the currency debasement, 7B.C. Lydia 1st coin was with cheaper metal mixed with gold or silver
Nero "Fiddles" with Rome's Money
37-mid 4th c. debasing into hyperinflation and back to barter and lost writing, entering Dark Ages
China inflates “the bark of trees”
from 9-mid 15th c. China paper money debasing into hyperinflation and next 500yrs back to copper/silver coinage
EU mercantilism & inflationism
16th c. King Henry VIII Great Debasement causing hyperinflation with his daughter Queen Elizabeth I restoring silver coinage that remained unchanged for centuries
Inflation that sinks the Spanish empire
Revenue-hungry gov’t debasing silver coinage and lost power to France
“Après Moi, le Deluge” of French Hyperinflation
Late 17th c. King Louis XIV devaluation & spending exploiting riches of the New World thru Mississippi Company by printing paper money, then exploration of Louisiana failed, shares collapsed, back to silver
Not Worth a Continental (worthless)
New World colonies, 1775 American Revolution and Franch Revoluton all abused paper money which led to hyperinflation. Napoleon Bonaparte retored order by creating new franc linked to gold until 1914. Enlightenment thinker John Locke, Adam Smith, Alexander Hamilton gave up fiat paper to embrace sound and stable dollar.
Money printing doesn't automatically mean inflation
Swiss Franc, population less than 9mil, 8 times more money per capita than Canada with a population 4 times of Swiss. Franc being the most stable currency, it's in high demand, thus Swiss print money to avoid Franc value from rising.
A Vibrant Economy, Booming Money Supply with No Inflation
1775-1900 US dollar value increase by 163 times but no change is dollar's value vs. gold suppoerted by strong economic expansions.
No Oversupply, But a Currency Fail
FDR 1932 Gold Program increased gold from $20.67 per troy to $35 to fight Great Depression which devalued dollar by 41%. Thai baht & Russian rubble tumbled in late 1990's due to loss of faith and confidance. HK dollar pegged to US dollar survived handover of HK
Supply, Demand, and Loss of Faith
Anything suggests currency in danger of losing value
Country faces a calamitous military defeat
Reckless gov't spending raises the possibility of a dramatic expantion of the money supply or an outright currency devaluation
The Superstorm of Hyperinflation
Steve Hanke economist hyperinflation is inflation at a rate of 50% per month for an extended period of time.
Adam Fergusson - When Money Dies, 1923, German Weimer hyperinflation 30,000%/month. Prices doubles every 3-4 days
Why Hyperinflation isn't just More Inflation
Inflationism in the Modern Era -> Rise of Keynes -> William Phillips "Phillips Curve" linking prosperity and full employment to heightened levels of inflation -> Nixon & Fed Chair Arthur Burns "easy money" debasing with sound money and Bretton Woods gold standard -> Great Inflation of 70' -> Keynesiamism fell out of favor and Phillips Curve disproved by Nobel prize winning economists but bad idea stayed on with US dollar as fiat money floating currency. -> post COVID inflation
The Failures of the Keynesian Fed
1913 after the Great Panic 1907, Fed was set up to serve as
"a lender of last resort" to prevent bank runs that caused the Great Panic.
to provide liquidity to banks to meet the seasonal case needs of America's large agricultural economy
central bank to protect dollar stability and ward off inflation
The Employment Act 1946 empower Fed to intervene inflation and employment
70' Congress required Fed to adopt Keynesian "dual mandate" to acheive "stable prices and full employment"
If downturn, pump in cheap money created out of thin air thru OMOs "open market operations": buying secrurities, mainly gov't bonds/treasuries from investment banks that are primary dealers of securities.
If forthy, tighten up, lenders buy bonds back from gov't and money goes back to Feds and disappears
12 regional Fed banks
owning 1/4 of nation's debt
Washington relies on constant flow of 0% interest rate "free loans" from Fed bond buying/money creation with 90 billion/yr interest rate going back to Treasury creating vicious cycle in need of more interest-free loans
Previously, open market operations were to ease or raise short-term rates. Now, QE Quantitative Easing with long-term low rates Treasuries and mortgage-backed securities (easy money what seemingly started housing bubbles in the first place)
Basel III, adopted 2010 to prevent 2008 GFC Global Financial Crisis caused by housing bubble, to require central banks to increase their reserves. Feds printing more money paying interests on balances with trillions in Fed "deep freeze"
deep freeze is why QE printing prodigious amounts of money w/o going into hyperinflation
2008-2021 US monetary base increased from 830 billion to 6 trillion creating gargantuan deficits
Sterilizing Money Creation via Reverse Repos
reverse purchase agreement - transaction that involves a short-term (often overnight) purchase of securities. The securities are then sold back to the initial party at a higher price
Pouring in water in one end and taking out water on the other end, preventing increase in money supply.
Why Can't We Just Print More Money
MMT Modern Monetary Theory - Socialist Progressive - proponent Biden admin, Stephanie Kelton
Japan, holding 50% gov't bonds, twice the federal debt held by Fed, is doing fine
Main concern is inflation but can be controlled by more gov't interventions and taxes
What's new is old, MMT is unshackling gov't turning it into bloated monster
Why Inflation is Bad
You can't devalue your way into prosperity
inflation will work initially creating jobs but rise in cost of living will hurt common ppl
Inflation's Monstrous Unfairness
Inflation as stealth tax, acknowledged by Keynes, to confiscate secretly and unobserved wealth of their citizens
Inflation Inequality
prices increase more for basic needs than luxury items measured by indicators like Gini coefficient (看股基本)
Mark Skousen, siting Ludwig von Mises, points out that those who most benefit are generally 1st recipient of Fed-created money (Wall Street, big banks, commercial interests & stock market investors)
Gov’t benefit from tax from higher wages
John Locke - currency devaluation a “public failure of justice” that gives “one man’s right and possession to another.”
An Enabler of Debt
Public fianance destroyed, only available at usurious interest rates and short maturity of less than a year
The Further Distortion of artificail low to zero interest rate brought by central baks, Kaynes on steroid panalize risky cash strapped small borrowers while benefiting big players: Apple taking out loans tens of billions free money to buy back its own stock while it has close to 100 billion cash on hand.
Biggest debtor is US gov't, 29 trillion early 2021
Josef Joffe: Inflation is the best way to make the public debt melt way and keep the floodgates open. Downside being devalued dollars making masses poorer and more dependent on gov't.
Markets Misled by the Money Illusion
The Energy Shortage that wasn't. 70's energy crisis blamed on Arab Oil Embargo is in fact currency crisis caused by Money Illusion.
After Nixon Shock, OPEC: member countries of OPEC will take the necessary steps to adjust crude oil posted prices accordingly if floating dollar dropped in value on foreign exchange.
Inflation's Funhouse Mirrors
When money davalues, it goes into hard assets, home owners are big winners during 70's and "dot com bubble burst" inflation with Fed's cheap money encouraging banks to give away mortgages. Loosened lending standards making loans available to higher-rish, subprime borrowers which led to 2005 subprime mortgage crisis
Gone the 20% downpay, "stated income loans"/"no-doc"/"liar loans" became common, then interest rate rose, 10 million ppl lost theirhomes, Lehman Brothers and Bear Stearns collapsed, Merrill Lynch then largest insurer sold, Citibank taken over by gov't, then 2008 Great Recession
Good Bubbles and Bad Bubbles
Fake inflationary signals misguide investment into nonproductive wealth preservation such as gold bullion. German Weimar piano, USSR stockpile bricks. John Hanke: You had a brick acct
Taxes are Inflated, Too
Bracket creeep - ordinary citizens socked with taxes meant for the rich, no inflationary adjustments. Higher pay was in inflated dollars taxed not on gain but inflationary illusions
Where This Leads: Stagflation
Favoring market incumbants over new ventures
murderous capital gains taxesfewer start-ups, abandoned housed
The Slow Stagnation of "Low-Level Inflations"
The Rise of the Regulatory State, more gov't wage, capital, price control keeping ppl from spending
Scandal of money, money creation + zero interest borrowing creating gov't dependency on social welfare, negating American dream
Trust Unravels
Looking for scapegoats, devaluing others
Society Debased
Morality Corrupted, strongman & dictators arise
How to End the Malaise
Pressuring ppl to spend less money or getting biz to lower prices do not work
Argentina: Capital control fail
Turkey: Cracking Down on "Food Terrorists" price control fail
Venezuela: More Money Printing
Nixon Shock: Price Explode, Gerald Ford PR "WIN" Whip Inflation Now didn't work, nor did Jimmy Carter
The Myth of Inflation Fighting thru "Austerity"
IMF thought devaluation in Thai baht was result of gov't deficit recommended risen taxes but brought disaster
IMF recommended austerity caused Russian Currency Disaster rubles valueless back to bartering
Why the "Fixes" fail
wage & price controls are inflation in reverse creating shortages
currency control a stopgap measure works in the beginning in the end create black market
austerity brings recession but like bloodletting cures disease but patient dies
central bank buys its own currency with dollar or euro end up dumping back its own currency, oversupply con’t
IMF package has political strings attached
Only way to fix inflation is to shrink currency oversupply
Gov’t buy back its own currency by foreign exchange and no sterilization
Selling assets typically gov’t bonds in exchange of domestic currency
pro-market policies
Money Miracles in Postwar JP & DE
Joseph Dodge outlawed gov't deficit spending Deutschmark linking to gold-based dollar replacing Reichsmark & gov’t no spending unless it's tax revenue & pairing with tax cut, economy soar 50'-60', eventually became core of euro
Joseph Dodge gov't spending ban and Yen linking to dollar + tax cut
How Paul Volcker Whipped 70's Stagflation
Loose commodity standards w/ Reagan’s free-market policies kept dollar stable.
Greenspan succeeded Volcker refined Volcker’s strategy and tamed dollar volatility further with The Great Moderation
Gold: The Way Forward
classical gold standard 1870-1914WWI
gold exchange standard after WWI
gold backed currency
gold price system
21st C. Gold Standard
dollar fixed to gold at a particular price based on 5-10yrs avg, marked up to insure against deflation
Fed using openarket operations to tie closely to gold pricing like currency board
supply of money contract when weak and expand when strong
1% fluctuation against gold like Bretton Woods
Fed no more dual mandate undermining growth and job creation
Fed can still set interest rate above free market rates when banks borrow money from the Fed at its discount window so banks don’t get cheap money to lend out like British pond end of 19th c.
What About Your Money
Price distortion making it hard to hedge against inflation
CPI basket of goods not being updated as often as it should, doesn’t incl health insurance, ignores consumer behavior in response to inflation
The CPI Inflation Calculator tells how much dollar’s purchasing power has dropped over a stretch of time (almost never increases)
PCE though incl health insurance but still flawed as it reflects symptoms of inflation not the illness, reading is slow to react by months
Best indicator
Gold Price
Commodity Prices oil silver wheat but lag gold Wall Street Journal / Fox Business/ Bloomberg/ CNBC
CRB Commodity Research Bureau Index
Bloomberg Commodity Spot Index
S&P GSCI Goldman Sachs Commodity Index
Fed Federal Funds rate, rate that influencing how much financial institutions can charge borrowers and the amount of money flows into the economy.
Low Federal Funds rates signals Fed is creating too much money.
Fed paying high interest on money bank parked at Fed signals inflation
Reading Fed's Balance Sheet
Central bank's assets and liabilities are published on its
“statistical release” (H.4.1) every Thurs. on Fed website
ttl currency in circulation
what Fed holds in securities, gold, foreign exchange & other assets
info on reverse repo that mask money expansion: “Factors Affecting Reserve Balances of Depository Institutions” and then “reverse repurchase agreements”
“Money Stock Measures” (H.6) more info on money supply
the M’s
M1 most liquid form of money: currency, traveler’s checks, demand deposits, savings deposits and other deposits against which checks can be written
M2 incl M1 + time deposits less the $100,000 & balances in retail money-market mutual funds
M3 incl M2 + large time deposits, institutional money market funds, short-term repurchase agreements (repos) & larger liquid assets
M0 most important to inflation “monetary base” “base money” currency in circulation + bank cash reserves
Velocity of money: website St. Louis Federal Reserve
Gov’t debt
Its ratio to GDP?
How much gov’t is borrowing to pay interest on its bonds?
Congressional Budget Office www.cbo.com for gov’t finance info
Should I Rebalance My Portfolio?
conventional 60/40 ratio 60% stock & 40% bond supposedly best risk vs return
With inflation, fixed return like bond should be avoided, real estate and precious metals are preferable
Stocks appreciation with ppl spend rising wages and big corp raking revenues from gov't created money but if factor in inflation it's not always growth
Physical commodities not for daily trader unless you have warehouse ready to take dlivery
Exchange Traded Funds with Commodities futures investor can trade but highly speculative cuz one effectively taking on debt
Commodity-Based Equities - commodity producer stock
This entire review has been hidden because of spoilers.
November 2, 2022
Clocks measure time, scales measure weight, and money measures worth. The more money that someone is willing to pay for a good or service, the higher that good or service is valued.
If a banana was a quarter last month, and now it costs a dollar, logic tells us that the banana is worth more now than it was then. This is usually caused by either a dwindling supply of bananas or a rising demand for them. If the worth of the banana goes down, it could likewise imply that either demand has diminished or supply has grown too rapidly. Let’s say the supply has grown too much, leading to a lower value for bananas. This same principle holds true for money itself; too much money in circulation means that its value decreases.
The first example, when the price of the banana changes due to supply and demand, is called ‘non-monetary’ inflation and illustrates a healthy market economy. This is characterized by consumers spending their money where and when they want. The second, when the price of the banana goes up because the money needed to purchase it has less value, is an example of ‘monetary’ inflation, and also an economy that is not functioning properly. This is when government and banking officials have artificially altered the value of money.
The oversupply of money is one of the major causes of inflation, which is why, during periods of inflation, prices rise. It is not because things are suddenly more valuable, it is because your money is worth less.
This is one of the primary reasons why the Roman Empire fell (in addition to marauding tribes and corrupt officials) after hundreds of years of success and prosperity. In order to finance his wars and lavish lifestyle, the Emperor Nero would melt down the silver coins in circulation and add copper to them, ultimately diluting their purity and devaluing the currency. When societies used hard physical currency, this devaluation could only go so far, as there is a finite amount of precious metals on this planet. Today, however, things are much different.
It was Sir Isaac Newton, the famed physicist, who first introduced the gold standard to Great Britain (and the world) in 1717. Before he was put in charge of the Royal Mint, coins were hoarded, clipped into smaller pieces, and debased with other metals. Newton not only set a fixed exchange ratio for gold and silver, but he also set standards for weight and density to dissuade fraud. He officially fixed the value of one British pound to gold at three pounds, seventeen shillings, and ten-and-a-half pence (£3.89). Alexander Hamilton followed this same strategy in the latter part of the century when the United States was first founding; pegging the value of the US dollar to a certain amount of gold (or silver).
The gold standard lasted for hundreds of years and brought unprecedented wealth, capital, and prosperity to both countries and eventually the world as other countries followed suit. This was because money had a specific and trusted value and worth. This trust led to the Industrial Revolution and all the wonderful innovations we have today. Sadly, the 20th century brought world war, and with it economic disaster.
Britain went off the gold standard in 1931, and the United States eventually followed in 1971 under President Richard Nixon. We are now all exchanging ‘fiat currency,’ which is money not backed by anything stable (it was usually gold, but also sometimes other commodities). This allows the government to determine the amount of money in circulation, and, in effect, determine the value of money. The free market is no longer in charge: now it is up to the bankers and politicians. And what do you think happens when you give people the ability to print free money? They spend hugely, as Nero once did, and as the Federal Reserve does now. The difference is that while Nero only had so much metal to melt, the Fed can print money indefinitely. The US government is currently in debt to the tune of around $29 trillion.
While we are feeling the effects of inflation due to the Covid pandemic disruptions and other current global affairs (war in Ukraine), the reality is that it has been happening right under our feet for decades. And, “if inflation hangs around long enough, and becomes severe enough, it becomes a truly vicious cycle. The economy deteriorates.” You can look at Zimbabwe and Argentina as examples.
The authors of this book believe that the only way to avoid total economic fallout is to return to the gold standard. The common argument against this case is that there is simply not enough gold to back up all the dollars. But “the gold standard is not about ‘supply’ but about maintaining stable currency value. You don’t need to have piles of this precious metal for a gold standard to work. Gold simply serves as the anchor of value…the gold price is the barometer that enables you to maintain a stable dollar value.”
While many economists debate the pros and cons of returning to a gold standard, one thing is for sure: we need to stop printing money before it becomes entirely worthless.
If a banana was a quarter last month, and now it costs a dollar, logic tells us that the banana is worth more now than it was then. This is usually caused by either a dwindling supply of bananas or a rising demand for them. If the worth of the banana goes down, it could likewise imply that either demand has diminished or supply has grown too rapidly. Let’s say the supply has grown too much, leading to a lower value for bananas. This same principle holds true for money itself; too much money in circulation means that its value decreases.
The first example, when the price of the banana changes due to supply and demand, is called ‘non-monetary’ inflation and illustrates a healthy market economy. This is characterized by consumers spending their money where and when they want. The second, when the price of the banana goes up because the money needed to purchase it has less value, is an example of ‘monetary’ inflation, and also an economy that is not functioning properly. This is when government and banking officials have artificially altered the value of money.
The oversupply of money is one of the major causes of inflation, which is why, during periods of inflation, prices rise. It is not because things are suddenly more valuable, it is because your money is worth less.
This is one of the primary reasons why the Roman Empire fell (in addition to marauding tribes and corrupt officials) after hundreds of years of success and prosperity. In order to finance his wars and lavish lifestyle, the Emperor Nero would melt down the silver coins in circulation and add copper to them, ultimately diluting their purity and devaluing the currency. When societies used hard physical currency, this devaluation could only go so far, as there is a finite amount of precious metals on this planet. Today, however, things are much different.
It was Sir Isaac Newton, the famed physicist, who first introduced the gold standard to Great Britain (and the world) in 1717. Before he was put in charge of the Royal Mint, coins were hoarded, clipped into smaller pieces, and debased with other metals. Newton not only set a fixed exchange ratio for gold and silver, but he also set standards for weight and density to dissuade fraud. He officially fixed the value of one British pound to gold at three pounds, seventeen shillings, and ten-and-a-half pence (£3.89). Alexander Hamilton followed this same strategy in the latter part of the century when the United States was first founding; pegging the value of the US dollar to a certain amount of gold (or silver).
The gold standard lasted for hundreds of years and brought unprecedented wealth, capital, and prosperity to both countries and eventually the world as other countries followed suit. This was because money had a specific and trusted value and worth. This trust led to the Industrial Revolution and all the wonderful innovations we have today. Sadly, the 20th century brought world war, and with it economic disaster.
Britain went off the gold standard in 1931, and the United States eventually followed in 1971 under President Richard Nixon. We are now all exchanging ‘fiat currency,’ which is money not backed by anything stable (it was usually gold, but also sometimes other commodities). This allows the government to determine the amount of money in circulation, and, in effect, determine the value of money. The free market is no longer in charge: now it is up to the bankers and politicians. And what do you think happens when you give people the ability to print free money? They spend hugely, as Nero once did, and as the Federal Reserve does now. The difference is that while Nero only had so much metal to melt, the Fed can print money indefinitely. The US government is currently in debt to the tune of around $29 trillion.
While we are feeling the effects of inflation due to the Covid pandemic disruptions and other current global affairs (war in Ukraine), the reality is that it has been happening right under our feet for decades. And, “if inflation hangs around long enough, and becomes severe enough, it becomes a truly vicious cycle. The economy deteriorates.” You can look at Zimbabwe and Argentina as examples.
The authors of this book believe that the only way to avoid total economic fallout is to return to the gold standard. The common argument against this case is that there is simply not enough gold to back up all the dollars. But “the gold standard is not about ‘supply’ but about maintaining stable currency value. You don’t need to have piles of this precious metal for a gold standard to work. Gold simply serves as the anchor of value…the gold price is the barometer that enables you to maintain a stable dollar value.”
While many economists debate the pros and cons of returning to a gold standard, one thing is for sure: we need to stop printing money before it becomes entirely worthless.
July 6, 2023
There is a lot this book gets correct and is worth knowing:
1) Devaluation of money either via literal debasement (diluted supply) or by the printing of more money (increased supply) undercuts the value of money on the demand side all things equal. We value something more as humans when there is less of it. It's why we value gold more than water.
2) History shows us that significant diluted supply or significant increased supply can lead to societal degradation and in extreme cases societal collapse. The examples in this book of which there were many are worth knowing.
3) MMT economic theory ignores the fundamentally sound logic of points 1) and 2) and all things being equal would lead to hyperinflation.
4) The delinking of USD from gold was disastrous for financial market stability. A return to a gold standard all things equal would be desirable. They are correct when they note we want money to be nothing more than a stable gauge of value to enable exchange.
I do have issues with this book:
1) Although I agree with their criticism of MMT the authors failed to probe into the MMT position in enough detail. For instance, the USA is the world's biggest market, a business juggernaut, and has global political influence and military strength far greater than anywhere else in the world. American exceptionalism is a real thing in these areas (from a European). These massive USA global strengths give its currency a level of insurance as other nations will want to access the USA market to do business, seek political favour in international institutions, and potentially military support from other perceived threats. In addition to this, the USA isn't alone in increasing money supply rapidly. This is occurring in most major markets. Where exactly in the world has a stronger currency to trade with other than USD right now? EU debt is also high and there is political instability and militaristic ineptitude. Swiss financial savvy looks a little ridiculous now in the wake of the Credit Suisse collapse and monolith UBS/CS monster that emerged out of it. The UK is a basket case with Brexit and debt. China is still miles off and politically unpalatable for a lot of the western world as a consideration to replace USD. Effectively, what I am saying is the USA is bigger than Rome, the Weimar Republic etc. It is a dominant hegemony. Kelton's MMT arguably can work when applied to a USA hegemonic power actor like the USA. It most definitely leads to hyperinflation when you consider any nation that is in financial competition with other nations who are realistic alternatives.
2) Not enough was said about why we value gold. In fact there was very little discussion about valuation at all. Use value especially needs to be discussed to understand what money is attempting to approximate.
3) Growing wealth inequality is also a very good gauge for societal collapse. If money isn't fairly distributed and gets concentrated in greater volume in the hands of a tiny minority the relative value share of societal value for the majority declines. This creates anger and often leads to revolt. End Times Elites, Counter-Elites and the Path of Political Disintegration by Peter Turchin is a good book to view this. Wealth redistribution would be a much better way to appease societal anger without printing money ad nauseum. The author's were very quiet on this point (probably because it hits their pocket especially Forbes which is a name synonymous with rich lists).
Overall, this book is worth reading. I appreciated the argument of this book, it's clarity, and directness. We have to learn that monetary systems are confidence machines but they are also approximations of real actual use value. Printing debt ad nauseum and stoking wealth inequality is not a good recipe in the long term for financial or political stability.
A dosage of economic conservatism is useful and should be taken by many who ignore it's logic and rationale.
1) Devaluation of money either via literal debasement (diluted supply) or by the printing of more money (increased supply) undercuts the value of money on the demand side all things equal. We value something more as humans when there is less of it. It's why we value gold more than water.
2) History shows us that significant diluted supply or significant increased supply can lead to societal degradation and in extreme cases societal collapse. The examples in this book of which there were many are worth knowing.
3) MMT economic theory ignores the fundamentally sound logic of points 1) and 2) and all things being equal would lead to hyperinflation.
4) The delinking of USD from gold was disastrous for financial market stability. A return to a gold standard all things equal would be desirable. They are correct when they note we want money to be nothing more than a stable gauge of value to enable exchange.
I do have issues with this book:
1) Although I agree with their criticism of MMT the authors failed to probe into the MMT position in enough detail. For instance, the USA is the world's biggest market, a business juggernaut, and has global political influence and military strength far greater than anywhere else in the world. American exceptionalism is a real thing in these areas (from a European). These massive USA global strengths give its currency a level of insurance as other nations will want to access the USA market to do business, seek political favour in international institutions, and potentially military support from other perceived threats. In addition to this, the USA isn't alone in increasing money supply rapidly. This is occurring in most major markets. Where exactly in the world has a stronger currency to trade with other than USD right now? EU debt is also high and there is political instability and militaristic ineptitude. Swiss financial savvy looks a little ridiculous now in the wake of the Credit Suisse collapse and monolith UBS/CS monster that emerged out of it. The UK is a basket case with Brexit and debt. China is still miles off and politically unpalatable for a lot of the western world as a consideration to replace USD. Effectively, what I am saying is the USA is bigger than Rome, the Weimar Republic etc. It is a dominant hegemony. Kelton's MMT arguably can work when applied to a USA hegemonic power actor like the USA. It most definitely leads to hyperinflation when you consider any nation that is in financial competition with other nations who are realistic alternatives.
2) Not enough was said about why we value gold. In fact there was very little discussion about valuation at all. Use value especially needs to be discussed to understand what money is attempting to approximate.
3) Growing wealth inequality is also a very good gauge for societal collapse. If money isn't fairly distributed and gets concentrated in greater volume in the hands of a tiny minority the relative value share of societal value for the majority declines. This creates anger and often leads to revolt. End Times Elites, Counter-Elites and the Path of Political Disintegration by Peter Turchin is a good book to view this. Wealth redistribution would be a much better way to appease societal anger without printing money ad nauseum. The author's were very quiet on this point (probably because it hits their pocket especially Forbes which is a name synonymous with rich lists).
Overall, this book is worth reading. I appreciated the argument of this book, it's clarity, and directness. We have to learn that monetary systems are confidence machines but they are also approximations of real actual use value. Printing debt ad nauseum and stoking wealth inequality is not a good recipe in the long term for financial or political stability.
A dosage of economic conservatism is useful and should be taken by many who ignore it's logic and rationale.
December 22, 2023
This is a very frustrating book. The main takeaways from the book, as presented by the authors, are below, but their argument isn't particularly persuasive. They offer some evidence, particularly historical examples and some analogies, but in a lot of places they just scoff at their opponents ideas (particularly Modern Monetary Policy) without really explaining why they are wrong. At one point, the ask "why not go back on the gold standard?", but then it doesn't actually answer the question. This book feels like it is aimed at true believers of the gold standard and low taxes/regulations but isn't built to convince a neutral observer. It was worth reading if you are interested in economic policy, but was ultimately disappointing.
1. Inflation results from loss of confidence in a currency. If people trust it less, they have less reason to use it and will prefer more solid currency.
2. The price of gold goes up when the dollar loses value. Gold has a very stable value, so its price fluctuates based on what is paying for it.
3. There are two types of inflation. One is temporary and reflects supply and demand. The other is from government mismanagement of the currency. The first is normal. The second is dangerous. It corrodes markets and "debases social behavior". It is to blame for nearly all major financial and political crises. The "money illusion" helps hide it because we want to believe that our currency is stable.
4. Higher prices are the effect of inflation, not the cause. The real cause is debasement of the currency.
5. There is no way for a nation to inflate its way to prosperity. Even a little inflation is damaging, despite what most economists say today. Without the "acceptable inflation" of the last 20 years, American consumers would have 40% more purchasing power today.
6. Hyperinflation is caused by countries trying to print their way out of debt. See the Weimar Republic or Zimbabwe. Modern Monetary Theory would lead to this.
7. Debasing money ultimately debases society by undermining trust and confidence in government and between citizens. Currency devaluations
8. Government spending is not about debt for your children, but about inflation now. It is a "stealth tax".
9. Sound money means no inflation but not price stability.
10. The best way to end inflation is to return to the Gold Standard. It worked for nearly two centuries but got away from it in the Nixon administration. Gold Standard would kill inflation.
6.
1. Inflation results from loss of confidence in a currency. If people trust it less, they have less reason to use it and will prefer more solid currency.
2. The price of gold goes up when the dollar loses value. Gold has a very stable value, so its price fluctuates based on what is paying for it.
3. There are two types of inflation. One is temporary and reflects supply and demand. The other is from government mismanagement of the currency. The first is normal. The second is dangerous. It corrodes markets and "debases social behavior". It is to blame for nearly all major financial and political crises. The "money illusion" helps hide it because we want to believe that our currency is stable.
4. Higher prices are the effect of inflation, not the cause. The real cause is debasement of the currency.
5. There is no way for a nation to inflate its way to prosperity. Even a little inflation is damaging, despite what most economists say today. Without the "acceptable inflation" of the last 20 years, American consumers would have 40% more purchasing power today.
6. Hyperinflation is caused by countries trying to print their way out of debt. See the Weimar Republic or Zimbabwe. Modern Monetary Theory would lead to this.
7. Debasing money ultimately debases society by undermining trust and confidence in government and between citizens. Currency devaluations
8. Government spending is not about debt for your children, but about inflation now. It is a "stealth tax".
9. Sound money means no inflation but not price stability.
10. The best way to end inflation is to return to the Gold Standard. It worked for nearly two centuries but got away from it in the Nixon administration. Gold Standard would kill inflation.
6.
May 23, 2024
Ummmmm. Just progressing on my quest to grasp a better understanding of economics in general. There is nothing special about this book. It’s a little more politically biased than I would have liked. However, that seems to be the general feeling I get with all these types of books. They can’t just give you facts as to what something economically is and the various ways countries combat different economic issues. They have to state their view and then attempt to destroy, and or embarrass any and all other ideas that don’t agree with them. For me, that is a turnoff.
I have my politics. I just don’t read a lot of politically opinionated books. At least without expecting a politically opinionated book. For example, I read The Promise Land by Barack Obama. I knew it would be political and I knew it would be biased towards a Democratic Liberal view point. So it didn’t irritate me when that is what I got. I have read other books with an understanding that a Republican conservative view would be prevalent and didn’t mind it. I just don’t like reading something that is viewed differently by all the political spectrum and have it be very politically biased. No.
Tell me your thoughts, fine. I want it, I am reading your book! Just don’t stop there tell me the opposite view, and tell me the opposite view as if you were a believer in it! Then give an argument against your view as if you were legitimately against it and then an argument against the opposite opinion that you really are against.
I want to think for myself, not be told what to think. I want to understand and understand in all facets, not just yours. When I have clear understanding then I will form my own opinion. It may be in line with you and it may not. It might even be a blend of both! I don’t know. Just don’t act like you have all the answers and everyone who disagrees with you is stupid. I don’t respond positively to that!
Overall, I think the book had bright spots, and it really did advance my understanding of inflation and its effects on the economy, even on a world wide scale. I just simply didn’t like the extreme opinionated comments that saturated the pages. Also. Honestly, you have to want to read a book like this. If you don’t then there is no way you finish it. And let’s be real for a moment. Economics, particularly inflation, is not the most interesting subject for most people!!!
I have my politics. I just don’t read a lot of politically opinionated books. At least without expecting a politically opinionated book. For example, I read The Promise Land by Barack Obama. I knew it would be political and I knew it would be biased towards a Democratic Liberal view point. So it didn’t irritate me when that is what I got. I have read other books with an understanding that a Republican conservative view would be prevalent and didn’t mind it. I just don’t like reading something that is viewed differently by all the political spectrum and have it be very politically biased. No.
Tell me your thoughts, fine. I want it, I am reading your book! Just don’t stop there tell me the opposite view, and tell me the opposite view as if you were a believer in it! Then give an argument against your view as if you were legitimately against it and then an argument against the opposite opinion that you really are against.
I want to think for myself, not be told what to think. I want to understand and understand in all facets, not just yours. When I have clear understanding then I will form my own opinion. It may be in line with you and it may not. It might even be a blend of both! I don’t know. Just don’t act like you have all the answers and everyone who disagrees with you is stupid. I don’t respond positively to that!
Overall, I think the book had bright spots, and it really did advance my understanding of inflation and its effects on the economy, even on a world wide scale. I just simply didn’t like the extreme opinionated comments that saturated the pages. Also. Honestly, you have to want to read a book like this. If you don’t then there is no way you finish it. And let’s be real for a moment. Economics, particularly inflation, is not the most interesting subject for most people!!!
April 7, 2023
Inflation has many definitions, but what is inflation according the book?
Inflation is the result of too much money chasing too few goods, but this is an oversimplification. Inflation can also occur quietly without dramatic increases in consumer prices.
The effect?
Money losing its value, prices rise and purchasing power declines.
While I don’t have that much knowledge about Inflation, it comes across as trust worthy source and an enrichment of knowledge about the subject inflation.
It does clarify Inflation, what it is, what it does, etc.
The book seems up-to-date with the information. Where there is talked about the use of cryptocurrency (which bloomed in popularity the past five years).
Keynotes:
#1 Inflation occurs when demand exceeds supply or the cost of supplies increase.
#2 the gold price is a critical indicator of the worth of the dollar and thereby the prospects of inflation.
#3 The value of a currency is ultimately determined by the ratio between (increasing) supply and (decreasing) demand.
#4 The idea that creating a little inflation will make people richer is flawed.
#5 Inflation unfairly tips the scales against lenders in favor of debtors. People with fixed obligations like rents or mortgages get to pay back loans with cheaper money.
#6 Inflationary bubbles are a result of misdirection of capital.
#7 The Money Illusion (created through Inflation) also affects taxation.
Inflation is the result of too much money chasing too few goods, but this is an oversimplification. Inflation can also occur quietly without dramatic increases in consumer prices.
The effect?
Money losing its value, prices rise and purchasing power declines.
While I don’t have that much knowledge about Inflation, it comes across as trust worthy source and an enrichment of knowledge about the subject inflation.
It does clarify Inflation, what it is, what it does, etc.
The book seems up-to-date with the information. Where there is talked about the use of cryptocurrency (which bloomed in popularity the past five years).
Keynotes:
#1 Inflation occurs when demand exceeds supply or the cost of supplies increase.
#2 the gold price is a critical indicator of the worth of the dollar and thereby the prospects of inflation.
#3 The value of a currency is ultimately determined by the ratio between (increasing) supply and (decreasing) demand.
#4 The idea that creating a little inflation will make people richer is flawed.
#5 Inflation unfairly tips the scales against lenders in favor of debtors. People with fixed obligations like rents or mortgages get to pay back loans with cheaper money.
#6 Inflationary bubbles are a result of misdirection of capital.
#7 The Money Illusion (created through Inflation) also affects taxation.
June 16, 2025
Solid 4 stars; financial intelligence or FQ remains under-appreciated and under-taught; inflation should be mandatory study material; it affects everyone and there are ways of mitigating its effects for your personal situation; on the subject be sure to also check: The Psychology of Money, Die with Zero: Getting All You Can from Your Money and Your Life, The World for Sale: Money, Power and the Traders Who Barter the Earth’s Resources, Money: A Story of Humanity and Smart Money: How Digital Currencies Will Shape the New World Order.
Read
December 10, 2022Key takeaways:
1. Money loses value and you get inflation when the dollar is no longer trusted as a reliable unit of worth.
2. A rise in the gold price means the dollar has lost value.
3. There are 2 types of inflation: One is a response to market conditions and is usually temporary (demand & supply). The other, which results when governments or central banks corrupt currency, is far more dangerous (it corrodes wealth, distorts markets and debates social behaviour)
4. Higher prices are the effect, and not the cause, of monetary inflation.
5. No nation, including the US, can inflate its way to prosperity. (the long-term result is fewer jobs and wealth destruction).
6. Moderate inflation results from short-term "stimulus"; hyperinflation comes from regular money printing to pay the government's bills (cases of Venezuela & Argentina).
7. Debasing money ultimately debases society.
8. Government spending is not about creating debt for your children. It's about creating inflation in the here and now.
9. Sound money means "no inflation", but not "price stability".
10. The best way to end inflation, and to spur economic growth, is through a return to a sound dollar anchored by gold.
1. Money loses value and you get inflation when the dollar is no longer trusted as a reliable unit of worth.
2. A rise in the gold price means the dollar has lost value.
3. There are 2 types of inflation: One is a response to market conditions and is usually temporary (demand & supply). The other, which results when governments or central banks corrupt currency, is far more dangerous (it corrodes wealth, distorts markets and debates social behaviour)
4. Higher prices are the effect, and not the cause, of monetary inflation.
5. No nation, including the US, can inflate its way to prosperity. (the long-term result is fewer jobs and wealth destruction).
6. Moderate inflation results from short-term "stimulus"; hyperinflation comes from regular money printing to pay the government's bills (cases of Venezuela & Argentina).
7. Debasing money ultimately debases society.
8. Government spending is not about creating debt for your children. It's about creating inflation in the here and now.
9. Sound money means "no inflation", but not "price stability".
10. The best way to end inflation, and to spur economic growth, is through a return to a sound dollar anchored by gold.
October 26, 2022
I LIKE THE BREVITY OF THE ARGUMENTS AND THEORIES THAT THE AUTHORS PRESENT IN THE BOOK. THEY TEND TO BE REPETITIVE IN NATURE AND YOU CERTAINLY GET WANT THEY ARE SAYING ABOUT INFLATION, THE CAUSES AND THE FAILED ATTEMPTS TO FIX IT NATIONALLY AND GLOBALLY. AND IN CASE YOU DIDN'T COMPREHEND IT THE FIRST TIME, THEY CONVENIENTLY REITERATE THE 10 MAIN POINTS AT THE END OF THE BOOK WITH THE PRIMARY ONE BEING: "THE BEST WAY TO END INFLATION, AND TO SPUR ECONOMIC GROWTH, IS THROUGH A RETURN TO A SOUND DOLLAR ANCHORED BY GOLD." MAKES SENSE TO ME. WHAT ALSO MAKES SENSE IS THE SEEMINGLY ENDLESS BAD DECISIONS MADE BY POLITICIANS AND ECONOMIC "EXPERTS" THAT KEEP US GOING DOWN THE WRONG PATH. PLUS, THE TELLTALE SIGN OF ANYONE NOT KNOWING WHAT THEY ARE DOING IS TO BLAME OTHERS FOR THE MESS THAT THEIR POLICY OR BELIEFS CAUSED.
October 18, 2023
I recently had the opportunity to meet Steve Forbes in Manhattan. He was promoting his latest book, which he co-authored with Nathan Lewis and Elizabeth Ames, titled Inflation: What It Is, Why It’s Bad, and How to Fix It. As a financial professional living in New York, I have always been a huge fan of Forbes’s editorials and was looking forward to hearing his views on the worst inflation cycle the US economy has seen in over 40 years. He signed the book and could not have been nicer. I have attached a link to my article below and I highly recommend reading this great book that puts in to context the current state of the American economy.
https://www.jpost.com/jerusalem-repor...
https://www.jpost.com/jerusalem-repor...
April 27, 2022
A quick, straight-forward read on the definition, history, and effects of Inflation. The authors dive into the two-types of inflation non-monetary and monetary. Non-monetary inflation being price increases due to temporary scarcity. Monetary inflation being the distortion of prices that occur when money loses its value. Most of the book is spent dealing with the latter.
The authors provide a roadmap forward for the US that requires linking the USD to gold, and decreasing government spending.
This book came out right before the Russian / Ukraine conflict, when inflation was clearly already a problem.
The authors provide a roadmap forward for the US that requires linking the USD to gold, and decreasing government spending.
This book came out right before the Russian / Ukraine conflict, when inflation was clearly already a problem.
May 12, 2024
Lewis, Ames and Forbes Hit it Out of the Park
Good read about a difficult to understand topic put in everyday language for anyone to understand about a nemesis of our time - inflation. Due to the current infatuation with MMT on the part of governing elites who are embracing spending money like there is no tomorrow, it could be there is no tomorrow for our children and grandchildren.
The authors hit the nail on the head about having a stable currency that can withstand the shocks of a modern economy while at the same time keeping score by keeping the goalposts at the same place.
Good read about a difficult to understand topic put in everyday language for anyone to understand about a nemesis of our time - inflation. Due to the current infatuation with MMT on the part of governing elites who are embracing spending money like there is no tomorrow, it could be there is no tomorrow for our children and grandchildren.
The authors hit the nail on the head about having a stable currency that can withstand the shocks of a modern economy while at the same time keeping score by keeping the goalposts at the same place.
October 27, 2022
This is a very informative book about inflation, not one of the main issues at the time of this review. I learned a lot about what inflation is. Many politicians are ghastly the issue and not paying close attention to fixing it. Working families receive an extra tax from inflation nobody is talking about. I highly recommend this book if you want to know more about inflation and how it infects our finances.
October 25, 2023
Inflation happens when the price of a currency falls.
Okay. Basic macroeconomics. So far so good.
From there forward, though, Forbes, Lewis and Ames gallop off to conflate correlation with causation at a prodigious rate. “The United States had a currency pegged to gold in the 1950s and ‘60s”, they intone a number of times throughout the book. “If the US had the same growth rate today as it did then, per capita income would be 72 percent higher. Americans would be paid in dollars with more spending power. The economy would be at least 50 percent bigger.”
The causative link here is never demonstrated. Never qualified, tested, examined or questioned, even for an instant. The United States also had a large onshore manufacturing industry through the ‘50s and ‘60s, and an extensive social safety net and network of price controls for agriculture goods. If the US had the same growth rate today as it did then… Correlation, as every beginner statistics student knows, is not causation, and yet the authors repeat this mantra over and over like some demented choir.
The correlations stack further, of course. Diocletian introduced price controls, inflation happened, and Rome fell. Barbarians? Nah. The nineteenth century saw major economies shift to a gold standard and more wealth production, faster, than ever before. Industrial revolution? Slaves producing wealth for minimal inputs? Colonial expansion accruing efficiencies and cheap inputs with the judicious application of military might? Nope. They had the gold standard (which Forbes thinks makes countries immune to inflation), and that got them where they needed to go. The French Revolution collapsed into the Terror, and there was inflation (even though, incidentally, they had a gold standard). Napoleon brought order (and a non-gold-standard system of bank notes), and the inflation stopped. Therefore both Terror and Napoleon were caused by inflation.
An astute reader might notice that in the cases of Rome and France—if we take these writers at their word—causation appears to flow in opposite directions: price controls set by an authoritarian emperor in Rome cause inflation causes the collapse of society; collapse of society in France causes inflation causes the emergence of an authoritarian emperor (who, as it happened, instituted price controls. But Forbes et al don’t mention that). As I say, an astute reader might notice that. Forbes et al did not. Or maybe they just think inflation is that bad. It causes all the bad things!
I note that inflationary periods in recent history have also corresponded with the COVID-19 pandemic and explosion in conspiratorial thinking around 2020–21; the breathtaking expansion of the internet, success of user-generated-content services like YouTube and TikTok and release of the iPhone circa 2007–09; and, in the late nineties, the success of both the first Mars Rover landing and the Spice Girls. I can only conclude that Mel B, NASA, Jeff Bezos, and Covid, like revolutionary terror, owe their success to inflation. Think of the savings on vaccines if we’d only raised interest rates!
Which brings us on to things that Forbes, Lewis and Ames don’t like. They don’t like raising interest rates. They don’t like big government, either, by which they mean governments doing or protecting anything that isn’t peoples’ money. They decry environmental regulations and MediCare, for instance, but are quite happy with federal guarantees for bank deposits. Hmm. They also don’t like the Biden administration and governmental covid responses terribly much (covid-related supply chain disruptions are classed as “governmental mismanagement”). But the thing they like least of all—and boy do they dislike it—is socialism.
Conveniently, “socialism” for Forbes, Lewis and Ames means essentially “anything we don’t like”. This includes the globally-respected Pearson education textbook Macroeconomics, now in its eighth edition. I’m not (as Nathan Lewis bills himself, despite coming somewhere below a Smile Orthodontics specialist, a LinkedIn profile and a noted solar fuels researcher when I search for his name) “among the world’s leading authorities on monetary policy and economic history” but I am (unlike, evidently, world-leading Lewis) a sufficiently competent historian to recognise that when someone dismisses a well-regarded source with an imprecisely-defined buzzword there’s more at work than good economics.
Forbes, Lewis and Ames present no arguments for their rejection of Macroeconomics, or indeed their rejection of “socialism”. In fact, they present almost no arguments at all. Those they do are largely ill-informed and historically illiterate: the old one about money solving the “double coincidence of wants”, which problem has never been observed in any society, therefore money’s central function is as a measure of worth. They just spout ideology, rail against monetary policy, and conflate correlation and causation. Then they salt and pepper with appeals to emotion, telling us about a couple whose diaper bill has skyrocketed to $300 because of inflation and a single mum who can’t afford meat for her kids. Therefore, gold standard. The extent to which this kind of poverty has to do with structural inequalities and the systemic extraction of wealth from lower classes goes entirely unmentioned. It’s probably socialism, and we can’t possibly have that.
Okay. Basic macroeconomics. So far so good.
From there forward, though, Forbes, Lewis and Ames gallop off to conflate correlation with causation at a prodigious rate. “The United States had a currency pegged to gold in the 1950s and ‘60s”, they intone a number of times throughout the book. “If the US had the same growth rate today as it did then, per capita income would be 72 percent higher. Americans would be paid in dollars with more spending power. The economy would be at least 50 percent bigger.”
The causative link here is never demonstrated. Never qualified, tested, examined or questioned, even for an instant. The United States also had a large onshore manufacturing industry through the ‘50s and ‘60s, and an extensive social safety net and network of price controls for agriculture goods. If the US had the same growth rate today as it did then… Correlation, as every beginner statistics student knows, is not causation, and yet the authors repeat this mantra over and over like some demented choir.
The correlations stack further, of course. Diocletian introduced price controls, inflation happened, and Rome fell. Barbarians? Nah. The nineteenth century saw major economies shift to a gold standard and more wealth production, faster, than ever before. Industrial revolution? Slaves producing wealth for minimal inputs? Colonial expansion accruing efficiencies and cheap inputs with the judicious application of military might? Nope. They had the gold standard (which Forbes thinks makes countries immune to inflation), and that got them where they needed to go. The French Revolution collapsed into the Terror, and there was inflation (even though, incidentally, they had a gold standard). Napoleon brought order (and a non-gold-standard system of bank notes), and the inflation stopped. Therefore both Terror and Napoleon were caused by inflation.
An astute reader might notice that in the cases of Rome and France—if we take these writers at their word—causation appears to flow in opposite directions: price controls set by an authoritarian emperor in Rome cause inflation causes the collapse of society; collapse of society in France causes inflation causes the emergence of an authoritarian emperor (who, as it happened, instituted price controls. But Forbes et al don’t mention that). As I say, an astute reader might notice that. Forbes et al did not. Or maybe they just think inflation is that bad. It causes all the bad things!
I note that inflationary periods in recent history have also corresponded with the COVID-19 pandemic and explosion in conspiratorial thinking around 2020–21; the breathtaking expansion of the internet, success of user-generated-content services like YouTube and TikTok and release of the iPhone circa 2007–09; and, in the late nineties, the success of both the first Mars Rover landing and the Spice Girls. I can only conclude that Mel B, NASA, Jeff Bezos, and Covid, like revolutionary terror, owe their success to inflation. Think of the savings on vaccines if we’d only raised interest rates!
Which brings us on to things that Forbes, Lewis and Ames don’t like. They don’t like raising interest rates. They don’t like big government, either, by which they mean governments doing or protecting anything that isn’t peoples’ money. They decry environmental regulations and MediCare, for instance, but are quite happy with federal guarantees for bank deposits. Hmm. They also don’t like the Biden administration and governmental covid responses terribly much (covid-related supply chain disruptions are classed as “governmental mismanagement”). But the thing they like least of all—and boy do they dislike it—is socialism.
Conveniently, “socialism” for Forbes, Lewis and Ames means essentially “anything we don’t like”. This includes the globally-respected Pearson education textbook Macroeconomics, now in its eighth edition. I’m not (as Nathan Lewis bills himself, despite coming somewhere below a Smile Orthodontics specialist, a LinkedIn profile and a noted solar fuels researcher when I search for his name) “among the world’s leading authorities on monetary policy and economic history” but I am (unlike, evidently, world-leading Lewis) a sufficiently competent historian to recognise that when someone dismisses a well-regarded source with an imprecisely-defined buzzword there’s more at work than good economics.
Forbes, Lewis and Ames present no arguments for their rejection of Macroeconomics, or indeed their rejection of “socialism”. In fact, they present almost no arguments at all. Those they do are largely ill-informed and historically illiterate: the old one about money solving the “double coincidence of wants”, which problem has never been observed in any society, therefore money’s central function is as a measure of worth. They just spout ideology, rail against monetary policy, and conflate correlation and causation. Then they salt and pepper with appeals to emotion, telling us about a couple whose diaper bill has skyrocketed to $300 because of inflation and a single mum who can’t afford meat for her kids. Therefore, gold standard. The extent to which this kind of poverty has to do with structural inequalities and the systemic extraction of wealth from lower classes goes entirely unmentioned. It’s probably socialism, and we can’t possibly have that.
September 26, 2022
I don't think I agree with what the book is proposing and I have problems with how quick it is to put causality in place of correlation in some historical periods.
BUT the book is well organized and the author presented its case with well thought out arguments.
It has opened me to consider the gold based currency system but it has not convinced me of its merits.
BUT the book is well organized and the author presented its case with well thought out arguments.
It has opened me to consider the gold based currency system but it has not convinced me of its merits.
November 2, 2022
This book presents examples of inflation throughout history and it’s effects. Essentially only the final chapter include what an individual can do about inflation (invest in diverse mutual fund and index funds while they are cheaper than usual) and what a government can do (stop printing more money & link currency to the gold standard).
November 20, 2023
A Good Introduction
A great summary. Inflation resulting from the devaluing of currency is not something we are accustomed to hearing. Both the right and left appear to be guilty. They use a complicated system to mask the ways they line their own pockets. All the while the common folks are told conflicting stories about where their money went!
A great summary. Inflation resulting from the devaluing of currency is not something we are accustomed to hearing. Both the right and left appear to be guilty. They use a complicated system to mask the ways they line their own pockets. All the while the common folks are told conflicting stories about where their money went!
March 2, 2024
This is a fantastic, readable book by Steve Forbes on basic macroeconomic principles and why the U.S. monetary policies should revert to when the U.S. was most prosperous. Inflation is NOT about rising prices, but it is about the devaluation of the dollar, returning to the gold standard, and stabilizing the USD.
April 27, 2024
The book gives you an overview of what inflation is and provides prospective solutions on how it can be curtailed. The most important being linking currency value to gold! It gives you an entry into the volatile stock/bonds market and makes you aware of points you need to address or keep in mind before jumping in. Overall, a good informative book !
April 29, 2022
lets elect a group of officials who will take us here
I’ve been in discussions about this before. But this is one of the most lucid presentations I’ve read about returning to the gold standard! FORBES FOR PRESIDENT!
I’ve been in discussions about this before. But this is one of the most lucid presentations I’ve read about returning to the gold standard! FORBES FOR PRESIDENT!
May 28, 2022
Some very interesting points about inflation, but would be even more comprehensive if it used data to supplement the anecdotal historical evidence for how inflation affects the economy. In general, very illuminating.
June 29, 2022
a good review
However, its proposal of a gold-based monetary system is not feasible. Politicians will resist it because it is inconvenient. The book will be far better with some graphs and tables and charts.
However, its proposal of a gold-based monetary system is not feasible. Politicians will resist it because it is inconvenient. The book will be far better with some graphs and tables and charts.
July 12, 2022
The book is concise and full of useful information. It hit right at the gap that I wanted to be filled. You not only learn about the history of Inflation and how peoples' lives were affected, but you will also learn how to think before investing in the upcoming days.
July 10, 2023
Anecdotal, based on the political views of the author instead of data.
Clearly shown in the biased language used:
- already-bloated bureaucracies
- runaway entitlement programs
- socialist fantasy
- issues like "climate change"
Clearly shown in the biased language used:
- already-bloated bureaucracies
- runaway entitlement programs
- socialist fantasy
- issues like "climate change"
Displaying 1 - 30 of 51 reviews