World-Wide Inflation; H. Hazlitt

This is made clear in a table just published by the First National City Bank of New York showing the currency depreciation in 45 countries, last year and over the last 10 years, as measured by cost of-living indices. The value of money declined faster last year than in the decade as a whole in 29 of the 45 countries. For the 1956-66 period, the median rate of depreciation of money in the 45 countries was 3.4 per cent a year, which means a loss of almost a third of the purchasing power of the currency in the full 10 years. The American dollar lost 2.8 per cent of its purchasing power in 1966. This was a greater deprecia tion than occurred in many small Copyright 1967, Los Angeles Times. Reprinted by permission. 556 or relatively impoverished nations, such as Guatemala, Honduras, Aus tria, and Nationalist China. Iran's currency actually showed a slight appreciation, the only one to do so.

This shows that neither small size nor national poverty necessar ily prevents a strong currency any more than great size or national wealth assures one. Most of the worst currency de preciations in 1966 occurred in South America - 18.6 per cent in Chile, 24.2 per cent in the Argen tine, 31.8 per cent in Brazil. The very worst depreciation re ported for the year - 38.6 per cent - was in Vietnam. The City Bank by implication attributes this in flation to a food shortage, espe cially the "rice panic." Yet the main explanation for the sharply lower purchasing power of Viet nam's money unit was the same as everywhere else: the government printed too much money.

1967 WORLD-WIDE INFLATION 557 In late 1965 and early 1966 the exchange rate of the Vietnam pi astre was practically cut in half, from 60 to the dollar to 118. The qUAntity of Di~gtreg was increased from 27 billion in 1964 to 48 billion in 1965 and then to 65 billion in 1966. At the end of 1966 the U.S. dol lar bought only 84 per cent as much as it bought 10 years before. On the same 10-year basis of compari son Belgium's currency bought on ly 80 per cent as much, West Ger many's 79, Switzerland's 78, Brit ain's 74, Italy's 72, Holland's 71, Sweden's 68, Japan's 66, France's 62, India's 57, Spain's 49, Chile's 10, Argentina's 6, and Brazil's only 2 per cent as much. There were a hundred alibis for this depreciation, a separate set for each country, but the real rea son was everywhere the same: the government printed too much money. Sometimes the excuse has been a "scarcity of goods." This excuse shows no correlation with what happened. Guatemala certainly has a relative scarcity of goods, but its currency has not depreciated at all in the last 10 years. In other coun tries the index of production has been soaring, yet the currency unit continues to buy less.

"War" is a favorite alibi for in flation, but the worst inflations in the last two decades have been in countries, as. in South America, that have not been at war. The truth is that inflation is al ways an act of government. It is a consequence of printing. too much money. Governments usually print the extra money because they spend more than they take in. And they spend more than they tax and try to live beyond their means because they are entranced by the vision of the welfare state. This policy bears other sed ucUve names - Expansionism, Growth, Planning, and, in the United States successively, the New Deal, the Fair Deal, the New Frontier, the Great Society. But it always means inflation, depreciating money, a further drift toward monetary chaos. ~ BEN MOREELL AMERICANS have been alerted against an undefined "commu nism." But many have not been alerted against the specific meas ures which, taken together, are communism. So, unknowingly, they accept the heart of the communist doctrine, which is the enhance ment of centralized state power at the expense of the natural rights of the individual; the right to life, the right to liberty, and the right to acquire, own, enjoy, and freely dispose of one's hon estly accumulated property.