There is a quote that has been associated with both Lenin and Keynes, "The best way to destroy the capitalist system is to debauch the currency." A short simple article in the Journal of Economic Perspectives, "Retrospective: Who said "Debauch the Currency" : Keynes or Lenin?"
and concludes that it was Lenin who first brought up this issue. Keynes then used this comment to discuss the problem with inflation.
The Lenin argument was that the capitalist system would be destroyed because of the arbitrary nature of inflation. It is an environment that confiscates wealth from the economy and destroys the confidence of everyone that the system work. It creates the illusion that wealth gathering is an gamble and destroys the relationship between debtor and creditors. Lenin was not for inflation during the early part of of the Russian revolution but soon realized that that the destruction of the the capitalist system could occur when confidence has been eroded. The populace will be open to a new order.
It does not matter who said the comment. Keynes clearly understood the ramification of inflation and fought against an unstable financial system in post-WWI Europe. What is relevant is the idea that inflation destroys confidence in the system. This would also apply to deflation. The lack of confidence coupled with the arbitrary natures of the cost of inflation is what destroys incentives to invest and retards growth.
Vigelance on price stability is important even in a recession. The actions today are what may lead to future price instability.
and concludes that it was Lenin who first brought up this issue. Keynes then used this comment to discuss the problem with inflation.
The Lenin argument was that the capitalist system would be destroyed because of the arbitrary nature of inflation. It is an environment that confiscates wealth from the economy and destroys the confidence of everyone that the system work. It creates the illusion that wealth gathering is an gamble and destroys the relationship between debtor and creditors. Lenin was not for inflation during the early part of of the Russian revolution but soon realized that that the destruction of the the capitalist system could occur when confidence has been eroded. The populace will be open to a new order.
It does not matter who said the comment. Keynes clearly understood the ramification of inflation and fought against an unstable financial system in post-WWI Europe. What is relevant is the idea that inflation destroys confidence in the system. This would also apply to deflation. The lack of confidence coupled with the arbitrary natures of the cost of inflation is what destroys incentives to invest and retards growth.
Vigelance on price stability is important even in a recession. The actions today are what may lead to future price instability.
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