[Editor’s Note: This article is adapted from a talk
delivered at the Mises Institute’s seminar “Inflation:
Causes, Consequences, and Cure.”]
In the denouement of the film There Will Be Blood,
the antihero Daniel Planview dramatically reveals to his nemesis that he has
secretly siphoned away all of the latter's underground oil. "Drainage!" he bellows, as only Daniel
Day-Lewis can, "Drained dry. I'm so sorry. Here, if you have a milkshake,
and I have a milkshake, and I have a straw. There it is, that's a straw, you
see? You watching? And my straw reaches across the room, and starts to drink
your milkshake. I... drink... your... milkshake! [sucking sound]"
Through inflation (expanding the money supply), as I will
show, the state and its cronies "drink our milkshake" every day.
Only, it does so surreptitiously, with nary a sucking sound to be heard. Understandably, everyone would like to see his own
personal money supply increase. That would obviously make the individual better
off. But does it make sense to conclude from that, that if a whole society’s
money supply increased, that the society would be better off?.....To Read More.....
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