Paul Greenberg

You'd think any country that had gone through hyperinflation would be aware of the dangers thereof. And you'd be right. No one has been more critical of this administration's inflationary policies than the Germans. They remember the hyperinflation of the Weimar Republic -- much better, apparently, than we Americans remember the stagflation of the Carter Years.

To quote Wolfgang Schaeuble, Germany's current finance minister: "It doesn't add up when the Americans accuse the Chinese of currency manipulation and then ... artificially lower the value of the dollar."

But that's the whole point of Ben Bernanke's grand strategy as chairman of the Federal Reserve System. He says, and doubtless believes, that what the American economy, and maybe the world's, needs right now is a little inflation. There is, of course, no such thing as a little inflation. Any more than a lady can be a little pregnant. It is in the nature of inflation to grow. Till just a little inflation becomes a lot. (Recommended Reading: "A Tiger by the Tail," Friedrich Hayek's classic treatise on, or rather against, inflation.)

Not just inflation but the expectation of inflation, says Doctor Bernanke, is a good thing. As he told a conference of fellow gurus at Jackson Hole (they always meet in the best places), "an increase in inflation expectations could become a benefit."

The great apostle of inflation in our time, Paul Krugman, has it all worked out. Call it Krugmanomics, which is not to be confused with real-world economics any more than Dr. Krugman's Nobel for his earlier, scholarly papers is to be confused with the slapdash punditry on display in his newspaper column.

Professor Krugman is often described as a Keynesian, but that's a libel on John Maynard Keynes, who understood the dangers of inflation early on. (See his "The Economic Consequences of the Peace," published in 1919, for an early warning against what he called "inflationism.")

Ben Bernanke seems to have read his Krugman. It would be more assuring if he were reading Milton Friedman, who caught on to this game long ago. As the Carter Years neared their sad anticlimax, it was Milton Friedman who warned that, instead of being a cure for unemployment, inflation would only bring more of it down the road.

The great rhetorical advantage of the inflationists is that, if their policies don't work, and one economic stimulus after another fails to stimulate the economy, at least to the extent they promised, then they can explain it's only because not enough of their advice was taken. Not enough money was printed!


Paul Greenberg

Pulitzer Prize-winning Paul Greenberg, one of the most respected and honored commentators in America, is the editorial page editor of the Arkansas Democrat-Gazette.