September 8, 2010

MEGAN MCARDLE: Inflation Won’t Help Us With Our Debt Load. “The broader availability of information on things like currencies makes it much harder for governments to get seignorage. There’s a lot of data that would tip analysts to a money supply growing unexpectedly rapidly, which means that interest rates on government debt would rise too fast for the inflation to do much good. That’s why I find the historical examples of all the sovereigns that debased their currency in order to ease their debt burden less than convincing, even though they are much beloved by many history-minded conservatives. I do not want to fall into the error of thinking that we are so modern as to be beyond all that sordid nineteenth century mess; human nature doesn’t change much. But technology has, and it has made this particular piece of trickery much harder.”

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