Is Business To Blame?

Some say business profits are the cause of inflation. But profits—in a voluntary market—are only an indication of efficiency and service to consumers. Legitimate profits have nothing whatsoever to do with inflation.

But big business’ demand for “easy money” certainly has been a significant reason for monetary expansion. Alan Greenspan, for example, claims that credit expansion to supply more than $600 billion in Federally guaranteed loans, all of which are for the benefit of business, is the most significant contributing factor to our inflation.

When I studied the amount of inflation since 1970 and the proportion of Federal deficits in those years that needed to be monetized—created out of thin air—I came up with some startling figures. It is possible that only twenty percent of the inflation, the expansion of the money supply, was necessitated by deficit spending. Eighty percent of the inflation, therefore, may have been for “stimulation” of the economy to aid big business and big banking. Whatever the motive, these institutions profit from the depreciation of the dollar.