And since any inflation, however modest at first, can help employment only so long as it accelerates, adopted as a means of reducing unemployment, it will do so for any length of time only while it accelerates. "Mild" steady inflation cannot help-it can lead only to outright inflation. That inflation at a constant rate soon ceases to have any stimulating effect, and in the end merely leaves us with a backlog of delayed adaptations, is the conclusive argument against the "mild" inflation represented as beneficial even in standard economics textbooks.
Friedrich HayekRelated topics
argument backlog beneficial constant economics effect employment end help inflation lead leaves length mild rate reducing standard steady time while means unemploymentRelated quotes
But further analysis and experience soon raised doubts about the efficacy of these new tools. Empirical research indicated that the Keynesian multiplier was much smaller than earlier analyses had assumed, reduced by a crowding out of interest-sensitive spending caused by an induced increase in the demand for money and by the effect of the larger national debt on long-term interest rates. The leakage of demand through imports and the effect of the fiscal expansion on the exchange rate further reduced the multiplier.
Martin Feldstein
England totally disarmed and an easy prey to hostile forces! Can you think of anything more likely to excite cupidity and hostile intention? We should sink to the level of a fifth rate Power, our Colonies would be stripped from us, our commerce would decline, famine and unemployment would stalk the land. ... I share your longing for peace. God forbid that it should be again disturbed! The constant and undivided effort of the Government is for its preservation. But I have yet to learn that the cause of peace can be served by rendering our country impotent.
Stanley Baldwin
If we continue to use industrial resources for other purposes – defence, housing, etc. thus preventing the diversion of resources to export work, the [exchange] rate will continue to fall. ... the basic idea of internal stability of prices and employment, which had dominated economic policy for so long will not be maintainable. It will not be possible to maintain stable internal prices and wages; it will not be possible to avoid unemployment. There will be a continuous process of change and readjustment and much of this will be painful.
Rab Butler
Time, unfortunately, though it makes animals and vegetables bloom and fade with amazing punctuality, has no such simple effect upon the mind of man. The mind of man, moreover, works with equal strangeness upon the body of time. An hour, once it lodges in the queer element of the human spirit, may be stretched to fifty or a hundred times its clock length; on the other hand, an hour may be accurately represented on the timepiece of the mind by one second. This extraordinary discrepancy between time on the clock and time in the mind is less known than it should be and deserves fuller investigation.
Virginia Woolf
The time has come to speak out. Britain is now locked in a vicious spiralling interest rates...The net result of completing the vicious circle is that prices have increased, the rate of inflation has gone up, the money supply has increased, unemployment has gone up, the rate of bankruptcies has increased, the industrial base has been further eroded, the Government's borrowing requirement has increased and as a result there is more pressure to raise interest rates yet again, to be followed inevitably by the same vicious circle. It is this that must be broken.
Edward Heath
