Central Bankers: Inflation is God’s Work

Tyler Durden's picture

Submitted by Doug French via the Ludwig von Mises Institute of Canada,

Inflation is always somebody else’s fault. Ludwig von Mises called out finger pointing central bankers and politicians decades ago in his book, Economic Policy. “The most important thing to remember is that inflation is not an act of God, that inflation is not a catastrophe of the elements or a disease that comes like the plague. Inflation is a policy.”

In the fall of 2007, Gideon Gono blamed his country’s inflation rate of 4,500 percent on “the differences that Zimbabwe has had with its former colonial master, the UK,” and added, “we are busy laying the foundations for a serious deceleration programme.” Deceleration? A year later inflation was 231 million percent.

Money printing didn’t have anything to do with it according to the central banker. Droughts began to be more frequent in the 2000’s and Gono believed  ”there is a positive correlation between the drought and inflation.” Dry weather, he told New African magazine, has, “got a serious bearing on our inflation level.”

In Gono’s dilluded mind,inflation was about the weather, lack of support from other nations, and political sanctions. He had nothing to do with the hyperinflation in his country. “No other [central-bank] governor has had to deal with the kind of inflation levels that I deal with,” Gono told Newsweek. “[The people at] my bank [are] at the cutting edge of the country.”

These days in Argentina its not the weather and political sanctions causing prices to rise, its businesses engaging in commerce. President Cristina Fernández de Kirchner is urging her people to work “elbow-to-elbow” with her government to stop companies from looting the people with high prices. Two weeks ago the government devalued the peso by 20 percent but it is private businesses that are stealing from working people with price increases.

Posters of retail executives have been plastered around Buenos Aires. For instance, Wal-Mart Argentina’s president Horacio Barbeito has his mug on a poster with the caption, “Get to know them, these are the people who steal your salary.”

Kirchner’s cabinet chief Jorge Capitanich calls economists who point to government policies as inflation’s culprit “undercover agents.”  He implies that these economists are the tools of business. “Argentines should know that independent, objective economists don’t exist,” Capitanich claims. “I want to say emphatically that when unscrupulous businessmen raise prices it has absolutely nothing to do with macroeconomic variables.”

In 2012 the president of Argentina’s central bank, Yale-educated Mercedes Marcó del Pont, said in an interview, “it is totally false to say that printing more money generates inflation, price increases are generated by other phenomena like supply and external sector’s behaviour.”

So while its central bank prints, the Kirchner government has enlisted the citizenry to work undercover in the fight against rising prices. A free smartphone application is encouraging Argentines to be citizen-cops while they shop.

The app is a bigger hit than “Candy Crush” and “Instagram.” President Kirchner wants “people to feel empowered when they shop.” And, they do. “You can go checking the prices,” marveled Analia Becherini, who learned of the app on Twitter. “You don’t even have to make any phone calls. If you want to file a complaint, you can do it online, in real time.”

“Argentina’s government blames escalating inflation on speculators and greedy businesses,” reports Paul Byrne for the Associated Press, “and has pressured leading supermarket chains to keep selling more than 80 key products at fixed prices.”

However, businesses aren’t eager to lose money selling goods. Fernando Aguirre told Chris Martenson that with price inflation running rampant, “Lots of stores don’t want to be selling stuff until they get updated prices. Suppliers holding on, waiting to see how things go, which is something that we are familiar with because that happened back in 2001 when everything went down as we know it did.”

In his Peak Prosperity podcast with Aguirre, Martenson makes the ironic point that when governments print excessive amounts of money, goods disappear from store shelves. In a hyper-inflation the demand for money drops to zero as people buy whatever they can get their hands on. Inflation destroys the calculus of profit and loss, destroying business, and undoing the division of labor.

Aguirre reinforced Martenson’s point. Describing shelves as “halfway empty,” in Argentina he said,  “The government is always trying to muscle its way through these kind of problems, just trying to force companies to stock back products and such, but they just keep holding on. For example, gas has gone up 12% these last few days. And there is really nothing they can do about it. If they don’t increase prices, companies just are not willing to sell. It is a pretty tricky situation to be in.”

Tricky indeed.  “It would be a serious blunder to neglect the fact that inflation also generates forces which tend toward capital consumption,” Mises wrote in Human Action. “One of its consequences is that it falsifies economic calculation and accounting. It produces the phenomenon of illusory or apparent profits.”

Inflation is also rampant at the other end of South America.  Venezuela inflations is clocking in at 56 percent. Comparing the two countries, Leonardo Vera, a Caracas-based economist told the FT, “Argentina still has some ammunition to fight the current situation, while Venezuela is running out of bullets.”

Fast money growth has also led to shortages such as “newsprint to car parts and ceremonial wine to celebrate mass,” reports the FT.

Venezuelan president Nicolás Maduro is using the government’s heavy hand to introduce a law capping company profits at 30 percent. Heavy prison sentences await anyone found hoarding, overcharging, or “destabilising the economy.”  Hundreds of inspectors have been deployed to enforce the mandates.

The results will be predictable. “With every new control, the parallel, or black market, dollar will keep going up, and so will the price and scarcity of milk, oil, and toilet paper,” says Humberto García, an economist with the Central University of Venezuela.

Don’t expect the printing to stop any time soon. Central bankers believe they are doing God’s work. “To ensure that my people survive, I had to print money,” Gideon Gono told Newsweek. “I found myself doing extraordinary things that aren’t in the textbooks. Then the IMF asked the U.S. to please print money. The whole world is now practicing what they have been saying I should not. I decided that God had been on my side and had come to vindicate me.”

It seems disasters wrought by inflationary policies must be experienced again and again, as “Inflation is the true opium of the people,” Mises explained, “administered to them by anticapitalist governments.”

The practice of central banking is the same around the world. The only difference is in degree. Before he destroyed the Zimbabwean dollar Gono looked to America for inspiration. “Look at the bridges across the many rivers in New York and elsewhere,” Gono told New African, “and the other infrastructure in the country that were built with high budget deficits.”

The Zimbabwe, Argentina, and Venezuela inflations may seem to be something that happens to somebody else. But Mr. Aguirre makes a point when asked about 2001, when banks in Argentina, after a bank holiday, converted dollar accounts into the same number of pesos. A massive theft.

“Those banks that did that are the same banks that are found all over the world,” Aguirre says. “They are not like strange South American, Argentinean banks–they are the same banks. If they are willing to steal from people in one place, don’t be surprised if they are willing to do it in other places as well.”

Comment viewing options

Select your preferred way to display the comments and click "Save settings" to activate your changes.
TeamDepends's picture

No, loving you unconditionally is God's work.

Jumbotron's picture

OMG !!!

They are going to burn down the whole world before it's all over with....just to save their vision of utopia.

Bending knee and bowing head......in  3.....2.....1.....

Looney's picture

I am not a religious person (and I don't hide behind "I am spiritual"), but... don't people use the word GOD too fucking often? Bitchez! ;-)


The Vineyard's picture

OK.  OK.  We get it.  America will soon go into hyper-inflation in spite of the deflationary pressures.  Blah, blah.  Bitches.

SafelyGraze's picture

“You can go checking the prices. If you want to file a complaint, you can do it online, in real time. Then the store is closed down and the store owner is put in jail. It's fantastic. Soon there will be no more stores, and selling will only be done by outlaws!"

as good as that sounds, it would be even *better* to have an app that would identify anyone who creates or adds value. 

that is the source of the problem, since it triggers a process leading to the sale of goods and services.

if all manufacturers/creators/valueAdders could be fined and incarcerated, the inflation problem would largely be eliminated.

mister keynes's stable boy


DoChenRollingBearing's picture



Venezuela and Argentina.  Other than being Hispanic and in South America, what else do they have in common?


Do we see a pattern here?

knukles's picture

Balmy warm temperatures, sunny, fine white sandy beaches, idyllic ever so well endowed women running about in skimpy bikinis, high heels and way too much makeup, looking for fat drunken slovenly gringos to bed, friendly subservient males willing to tend gardens for pennies and abuse...

... such lovely loving people...

kaiserhoff's picture

Is it cheaper if we charter a plane for a mass gringo Spring Break?

How about one way tickets, amigo?

knukles's picture

Jesus, man.
I dunno if we'd make it back.

Tyler'd be getting ransom demands for our return and you know what'd happen then with the CIA involved and all
We'd be blamed for the Venesuvian Spring Thing...


It truly has the markings of one of those seemed like a good idea at the time moments

LetThemEatRand's picture

Love you man, but Finland also has socialism and it's peachy if cold.  There's a lot more behind what is happening in those nations and it involves authoritarian rule to feed the very wide mouths of oligarchs.  Socialism is a tool designed to keep the masses fed while their nations' wealth is handed to the oligarchs.   And when the shit hits the fan, the oligarchs step in and tell the people they need to make do with less socialism because socialism was the problem.  Very clever, these guys.  Socialism is often mistaken for fascism, which is what is taking over the world.

DoChenRollingBearing's picture

I guess my response would be to have you suggest to Maduro that he ask Finland how they do Socialism right...  He said he knows, but it appears not.

Or could it possibly be that corruption is less of an issue in Finland?  Corruption was the other thing in common with Venezuela and Argentina I should have thought of before posting.

LetThemEatRand's picture

I personally see corruption as the biggest problem.   I'm no advocate of socialism in its true sense (workers own the means of production), but I do believe that a social safety net and reasonable labor/environmental regulation are beneficial to a functioning society.

StychoKiller's picture

Sorry but that "social safety net" soon turns into economic Kudzu, strangling the productive!

MeelionDollerBogus's picture

Workers are front-line & understand the nitty-gritty of every job they do & connect to.

Why SHOULDN'T they be owners of the means of production, if they can afford to be?

Seems odd NOT to support this. Even homesteading is the worker owning the means of production, only it's a person/family, rather than a larger collective unit. And when it's that, we call it capitalism. Real captialism & real socialism have more in common than anything else on Earth invented by man for religion, politics or war.

akak's picture


Show me all the nefarious multinational corporate oligarchs who were supposedly responsible for Zimbabwe's breathtaking currency depreciation, or for Venezuela's or Argentina's current if milder currency depreciation.  Those were and are strictly home-grown affairs and you know it.

But hey, SOMEBODY has to pay when the socialists run out of other people's money.

LetThemEatRand's picture

Zimbabwe was not socialist by any definition I know.  It was a classic Kingdom run to funnel money to the King who calls himself President.   The King called himself a socialist but he owned everything.  That's a dictatorship.

akak's picture

You just described almost every self-identified "socialist" regime that has ever existed.

LetThemEatRand's picture

"Self-identified" is the key.   I don't think there's an example on earth of an actual, true socialist society.   Probably because it wouldn't work.  But telling people what they want to hear and doing the opposite to enrich oneself works quite well.   And I should add that I'm guilty as in posts above of using the term "socialism" incorrectly, because it is so commonly (and incorrectly) equated with any system that involves a social safety net and wealth distribution system that does not funnel everything to the top.

StychoKiller's picture

"They talk like Marxists,

Rule like Stalin and

Live like Rockefellers --

While the poor suffer!"

MeelionDollerBogus's picture

except Finland, Norway, Canada...

Anusocracy's picture

Any form of government technically 'owns everything'.

Including the people.

Reality is a nasty little bitch.

LetThemEatRand's picture

I would argue that the U.S. in its earlier stages is an example to the contrary, but I agree it devolved into that.  I just don't see a good, viable alternative to the earlier U.S. concept.  I realize that you do, but I think a true free market would just be more of the same without elections.

FilthyPhil37's picture

America taxes you regardless of where you work. It truly owns its citizens. 

nmewn's picture

You do realize Finland confiscates around 50% of a persons salary at only 100k right?

MeelionDollerBogus's picture

You do realize the value returned from the taxes is probably 1000x more than what's returned from "capitalist" nations, right?

Real healthcare, real infrastructure, real peace in the streets, no racial-violence insanity or prison-industrial complex.

It's called real freedom, where people are happy, free & would gladly keep it that way without the threat of violence.

Boxed Merlot's picture

what else do they have in common?...




StychoKiller's picture

I keep hearing the Pope(s) espousing communistic ideas (all the while enjoying the gilded digs in the Vatican)...

Ban KKiller's picture

AKA, central control, no free market just like us!

MeelionDollerBogus's picture

no, they have dictatorial powers, anti-socialism.

The people must collectively own the means of production to be socialism & being able to voluntarily opt-in or opt-out is permissible as socialism, though not strictly required either.

In these countries the people do not collectively own the means of production: not socialism.

knukles's picture

Of course Inflation is Not God's Work!
In Our Modern Secular World, there is no God but The State

Thus by Simple Syllogistic Logic, Nothing Can Be God's Work, For it is All And Everywhere, the State.

So it must be them fucking speculators... Quick a distraction... Get the speculators... Quick, raise the taxes on the middle class.. Quick a distraction... Hegelian Dialectic time... Calling Eddie Bernays, Eddie Bernays to the Teleprompter...

Looney's picture


Terry Bradshaw

P.S. That was NOT the scene from The Groundhog Day ;-)

Unknown User's picture

Actually... The Weimar financial crisis began with the crushing reparations payments imposed at the Treaty of Versailles. Hjalmar Schacht, who was currency commissioner for the Republic, wrote in his 1967 book The Magic of Money that it was the privately-owned Reichsbank, not the German government that was pumping new currency into the economy. What drove the wartime inflation into hyperinflation, said Schacht, was speculation by foreign investors, who would sell the mark short, betting on its decreasing value.  Speculation in the German mark was made possible because the recently privatized Reichsbank made massive amounts of currency available for borrowing, marks that were created on demand and lent at a profitable interest to the bank.

PT's picture

Don't homocidal maniacs also claim to do "God's work"?

knukles's picture

<-- Homocidal
<-- Homicidal

Looney's picture

<-- Homoracial

<-- Heteroracial

Loo(Knukles rocks!!!)ney   ;-)

PT's picture

Hummus side order???

Gee, I really hate it when I make spelling errors.

PT's picture

Hummus sidle?

Hummers' Idol?
Home of (Billy) Idol?
Homer's idle? 

max2205's picture

Printing is bad....got it?

limit_less's picture

Central bankers are god therefore inflation is god's work. Elementary.

Soul Glow's picture

Inflation is the policy.

TrustWho's picture

Paul Volcker created a credibility image as head of The Fed fighting inflation. Through Paul Volcker, the US government would protect the value of the USA dollar. I am sure you agree with me this credibility image has been shredded with holes, but disagree on the degree of the shredding.

The President and Congress has appointed a small grey-haired female to head The Fed who has a physical image directly opposite the image of Paul Volcker--a tall, deep voiced, energetic, bald-headed, kick-ass, intelligent, alpha male. I hope The Fed Board can still appreciate the importance image plays in your financial game, but realize you might be unable to do this even in private. 

Ms. Yellen is forced to over-play the strong image to demonstrate the resolve that her image harms. Personally, I thought she failed in her first congressional hearing and appeared to be a "deer doe frozen in the headlights". If The Fed does NOT stop QE printing, Ms. Yellen's reign will be cooked in my humble opinion. 

Here is a suggestion. One of The Fed Board members, Mr. Fisher would be my choice, should write a novel on a hyper-inflation moment in history from the perspective "How do you stop doing the printing when you know the printing is feeding the monster". Since you are now walking in their shoes, Fisher would have great insight. There will NEVER be a perfect moment to stop. How does one stop when the risk of calamity is above zero? Oh the complex web we weave!

StychoKiller's picture

You never woulda been elected to Earthican president if you hadn't stolen that killbot's body!

Kirk2NCC1701's picture

Inflation is Devil's work.  Deflation is God's work.

Jumbotron's picture


Jesus said to them, "Be on your guard and beware the yeast of the Parisees and the Sadducees."

knukles's picture

I knew two sisters form Paris who had yeast problems....
.... damn

Jumbotron's picture



Hulk's picture

but they could make one hell of a sourdough !!!

Jumbotron's picture

Even MOAR TMI....Hulk.   LOL.....uurrrk....raallllllllph  !!!!!     oooo....sorry.

disabledvet's picture

agreed. "inflation has a thousand fathers...deflation only one."
Denial aint' just river either.


limit_less's picture

Amen to that. Deflation is god's way of allowing everyone to benefit from human progress.