"So the Great Depression was not produced by a failure of business. On the contrary, it was produced by a failure of government...and a failure of government in an area in which responsibility had been assigned to government since the founding of this country...We have learned from that failure. The Federal Reserve will not fail in the same way again. This time it will fail in a different way. This time it has been failing, not by producing a Great Depression, but by producing an inflation. Because just as you will hear the story that it was business that was responsible for the depression, so you will today hear the story that it is labor and management that are responsible for inflation. It is the same kind of a myth."The inflation he is speaking of here is in the 1970s when interest rates were in the double-digits and much of the American manufacturing base, such as steel, collapsed. President Gerald Ford ran on a W.I.N. platform, which stood for Whip Inflation Now. It was a time of what was being called "hyper-inflation," and it was devastating to our economy.
Today, we are on the verge of another devastation to our economy. The Federal Reserve is printing more and more money. This causes the value of the dollar to drop, and therefore, prices to raise...this is inflation. But who is to blame. Once again, Friedman tells it like it is:
"Inflation is made in one place, and one place only...Washington D.C. And in Washington D.C., the chief source...immediate source of inflation...is a Greek temple on Constitution Avenue, which houses the Federal Reserve Board. An accomplice, and a major accomplice of course, sits in the halls of Congress in Washington. They are a major accomplice because you tell 'em to be. The American people have been telling Congress for many years, 'Spend more money on us, please.' But they've been telling us, 'Don't raise our taxes.' Congress has been listening. It's been spending more money on you, but, on the other hand, its been very unwilling to raise taxes. As a result, its imposed inflation as a tax. That's one tax you don't have to vote for...but you have to pay."I fear, though, that things are building to be even worse. With the debt as high as it is, many in government today seem to have no problem both causing inflation and increasing taxes.
Watch the whole video. It's an interesting history lesson, one that is very relevant for today.
