Readers of the Mises Wire are most likely familiar with the Volcker moment. This was when former Fed chair Paul Volcker, in the face of steep price inflation, skyrocketed rates to nearly 20 percent. While critics of the Volcker moment complain that such a move also skyrocketed unemployment to almost 11 percent, it cannot be ignored that the price inflation was finally reined in. Not only did we see the benefit in reduced inflation, but Austrians have an answer regarding the unemployment.

The same is true of employment from inflation. If we were to stop inflating, then the jobs created by inflation would disappear. We are not profiting from inflation because these jobs exist. Rather these jobs are channeling resources from more valued means that we cannot possibly see in the face of this brutal inflation.

In fact, if we were to look at the CPI as it was calculated back in Volcker’s time, we’d need a rate over 20.00 percent. A genuine Volcker moment would bring about serious economic hardship, which makes it hard to advocate. However, before long, the absence of such a moment will cause even more serious and much more prolonged economic hardship.

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Source: CONNOR MORTELL | MISES.ORG