The Inflation Narcotic

Doctor please, some more of these
Outside the door, she took four more
What a drag it is getting old
--Rolling Stones

Russell has it right. Inflation is a political method of avoiding economic pain--pain that comes from living beyond one's means for excessive periods of time.

The pain takes the form of austerity. Living below one's means to in order to reduce debt. Because people prefer pleasure to pain, austerity is undesirable.

Thus people create political institutions that administer drugs that avoid the pain. The narcotic of choice is inflation.

As Russell notes, we have been on this drug for a long time. But how much longer can we medicate? It seemed that we were hitting bottom last year. But recent coordinated central bank inflations suggest that another round of drugs may be doing the trick once again.

As with the addict, however, each new round requires a larger fix than before--for lesser and lesser effect.

If we do not voluntarily get off the drug, then two endgames dance with each other on the spectral floor of chance: a) hyperinflationary overdose from too big of a fix b) deflationary withdrawal when drug providers refuse to provide another fix.