by Sennholz
[Introduction and the Causes of Inflation in the Welfare State]: Hans Sennholz introduces inflation as a tool used by the collectivistic state to fund welfare programs and redistribute wealth when taxation becomes politically inexpedient. He argues that inflation is driven by government expansionism, excessive taxation (citing Colin Clark's 25% threshold), and the coercive wage pressures of labor unions. The section concludes with a critique of Keynesian economic doctrines, which prioritize inflationary remedies for unemployment over wage adjustments, famously dismissing long-term consequences with the phrase 'in the long run we are all dead.' [The Disastrous Effects of Monetary Depreciation on Society]: This section details how inflation redistributes wealth from lenders to borrowers, disproportionately harming the thrifty middle class who hold savings in money-denominated assets like insurance and bonds. Sennholz cites F.A. Hayek's statistical inquiry to show the massive loss of purchasing power across Western nations over 45 years. He further explains how inflation radicalizes intellectuals on fixed incomes and creates a financial squeeze for regulated industries like railroads, whose prices are kept rigid by government decree while costs rise. [The Trade Cycle and the Boom-Bust Phenomenon]: Sennholz argues that monetary expansion is the sole cause of the trade cycle, including the Great Depression and post-WWII recessions. He explains that inflation creates an artificial boom characterized by malinvestments and rising factor prices, which inevitably leads to a bust once profit margins are squeezed. He warns that attempting to sustain the boom through continuous credit expansion will lead to a 'crack-up boom' or a transition into socialism through price and wage controls. [Taxation, Velocity of Money, and Industrial Capital Consumption]: The author discusses the 'velocity of money' as a psychological reaction to anticipated inflation and describes how inflation interacts with progressive taxation to push citizens into higher tax brackets. A significant portion is dedicated to J. Howard Pew's analysis of how inflation causes businesses to overstate profits because tax laws only recognize original costs rather than higher replacement costs for equipment. This leads to the taxation of capital itself, resulting in sluggish economic growth. [The Silver Crisis and the Disappearance of Coinage]: Sennholz predicts the disappearance of silver coins from circulation as the market price of silver rises above the face value of the coins. He notes that silver dollars have already vanished and predicts a new coinage law to replace silver with nickel or steel. He also describes the quiet replacement of silver certificates with Federal Reserve notes as a move away from legally redeemable commodity money. [The Gold Crisis and the Path to Monetary Reform]: The final section addresses the international gold drain caused by the U.S. balance of payments deficit. Sennholz argues that the U.S. is nearing international bankruptcy and that a collapse of the gold-dollar standard is imminent unless there is a radical reversal of interventionist policies. He calls for balanced budgets, credit restrictions, lower business taxes, and the abolition of labor union privileges to restore a flexible market. He concludes by warning that a failure to reform will lead to a 'Calamity Deal' of rapid currency depreciation and potential tyranny. [Cracker Barrel: Political and Constitutional Commentary]: A collection of short editorial notes (Eagle Rock) by Jack Moffitt. Topics include a critique of the United Nations for violating its own charter, the expansion of federal power through regional programs like Appalachia, George Washington's warning against constitutional change by usurpation, and the presence of communist-organized disturbances on California campuses.
Hans Sennholz introduces inflation as a tool used by the collectivistic state to fund welfare programs and redistribute wealth when taxation becomes politically inexpedient. He argues that inflation is driven by government expansionism, excessive taxation (citing Colin Clark's 25% threshold), and the coercive wage pressures of labor unions. The section concludes with a critique of Keynesian economic doctrines, which prioritize inflationary remedies for unemployment over wage adjustments, famously dismissing long-term consequences with the phrase 'in the long run we are all dead.'
Read full textThis section details how inflation redistributes wealth from lenders to borrowers, disproportionately harming the thrifty middle class who hold savings in money-denominated assets like insurance and bonds. Sennholz cites F.A. Hayek's statistical inquiry to show the massive loss of purchasing power across Western nations over 45 years. He further explains how inflation radicalizes intellectuals on fixed incomes and creates a financial squeeze for regulated industries like railroads, whose prices are kept rigid by government decree while costs rise.
Read full textSennholz argues that monetary expansion is the sole cause of the trade cycle, including the Great Depression and post-WWII recessions. He explains that inflation creates an artificial boom characterized by malinvestments and rising factor prices, which inevitably leads to a bust once profit margins are squeezed. He warns that attempting to sustain the boom through continuous credit expansion will lead to a 'crack-up boom' or a transition into socialism through price and wage controls.
Read full textThe author discusses the 'velocity of money' as a psychological reaction to anticipated inflation and describes how inflation interacts with progressive taxation to push citizens into higher tax brackets. A significant portion is dedicated to J. Howard Pew's analysis of how inflation causes businesses to overstate profits because tax laws only recognize original costs rather than higher replacement costs for equipment. This leads to the taxation of capital itself, resulting in sluggish economic growth.
Read full textSennholz predicts the disappearance of silver coins from circulation as the market price of silver rises above the face value of the coins. He notes that silver dollars have already vanished and predicts a new coinage law to replace silver with nickel or steel. He also describes the quiet replacement of silver certificates with Federal Reserve notes as a move away from legally redeemable commodity money.
Read full textThe final section addresses the international gold drain caused by the U.S. balance of payments deficit. Sennholz argues that the U.S. is nearing international bankruptcy and that a collapse of the gold-dollar standard is imminent unless there is a radical reversal of interventionist policies. He calls for balanced budgets, credit restrictions, lower business taxes, and the abolition of labor union privileges to restore a flexible market. He concludes by warning that a failure to reform will lead to a 'Calamity Deal' of rapid currency depreciation and potential tyranny.
Read full textA collection of short editorial notes (Eagle Rock) by Jack Moffitt. Topics include a critique of the United Nations for violating its own charter, the expansion of federal power through regional programs like Appalachia, George Washington's warning against constitutional change by usurpation, and the presence of communist-organized disturbances on California campuses.
Read full text