Sunday, April 26, 2009

why Bother About inflation ? (6)

A final reason for rejecting inflation is that it distorts the institutions which lie at the heart of modern capitalist society. Once again it is hard to improve on Hick is treatment . He says :
The habits- business habits as well as personal habits- which are based on the assumption of stable prices are too strong to be easily broken. Nor is it just habits... it is also institutions. The accounting system, the tax system, even the general legal system, all are based on the assumption of stable value of money ; if the value of money is seriously changeable, they are twisted out of shape. The accountant is "profits" cease to be true profits; the taxes that are imposed are different to what was intended; the fines and penalties imposed by the courts, as well as the compensations which they award, lose their proper effect. now it is of course true that these things can be put right (for a time) by legislation; but only by re-opening issues that had been taken to be closed. There is waste of time in re-discussing them-surely a much more serious waste of time and energy than is involved in holding "too small" money balance.

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