Skip O'Neill – Liberty for All

Ron Paul for A New Direction

Inflation and smoking, what they have in common.

with one comment

Smoking is a human action. People smoke because it feels good to them. But in the long term, smokers start coughing, feeling bad, and even dying from lung cancer. The good consequences appear immediately. The bad consequences may take years to manifest.

If a smoker tries to stop, some bad consequences called withdrawal symptoms appear immediately. It may take two to three months for the good consequences to become noticeable.

This is why it is so difficult to stop smoking. Simplistically speaking it is easy to say, “the cure for smoking is to stop smoking.” In practice it is not that easy.

So too, with inflation. When the additional currency is pumped into the system, the fortunate recipients of the new currency go on a spending spree, the stock market goes up, new economic activity is stimulated, people become more enthusiastic, and new jobs are created. The good consequences appear immediately. But two years later prices go up, consumers complain, and politicians talk about “fighting inflation.” The bad consequences appear much later the Fed tightens the screws, and the economy becomes “depressed.”

It is easy to say, “the cure for inflation is to stop inflating.” But if currency inflation is stopped, the stock market immediately tumbles, interest rates go up, “money” becomes tight, companies go bankrupt, people lose their jobs, and the economy becomes “depressed.”

We are addicted to inflation like the compulsive smoker to nicotine and the alcoholic to alcohol.

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One Response

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  1. This brings to mind images of “Whip Smoking Now” buttons.

    Great analogy.

    Daniel

    March 17, 2012 at 11:49 am


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