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News Link • Inflation

Did You Know about the Great Hyperinflation of the 17th Century?

• https://fee.org, Lawrence W. Reed

Reputable private issuers of money, when governments don't ban them for self-serving reasons, might be tempted to dilute the value of their product. Their incentives, however, tend to run strongly in the other direction.

If their product gains in value, they make money (literally and figuratively). If they debase it, they might be prosecuted for counterfeiting or fraud. But in any event, customers will flee to competitors happy to "make money" by offering it in a more trustworthy form. 

When entrepreneurs and willing customers shape the framework of a market, the famous Gresham's Law works in reverse: the good money drives out the bad. 

Similarly, because you prefer fresh eggs to expired ones, or use an iPhone now instead of a walkie-talkie, the inferior product disappears. But when political monopolists backed by the coercive power of government are in charge, the quantitatively-eased stuff is foisted on you whether you like it or not, while the good alternatives are driven overseas or underground.

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