“The inflationary process is indispensable for masking the capital decumulation crisis precipitated by war mobilization, which would otherwise be swiftly revealed to one and all by monetary calculation. In the absence of the veil cast over real economic processes by inflation, skyrocketing interest rates, plummeting stock and bond markets, and pandemic business bankruptcies and bank runs—not to mention the levying of confiscatory kinds and levels of taxation—would serve to rapidly and significantly dampen the public’s enthusiasm for the alleged glories of war.”
Recorded at the Mises Institute’s “Costs of War” conference in May 1994 in Auburn, Alabama: https://mises.org/library/the-costs-war
Joseph Salerno is academic vice president of the Mises Institute, professor emeritus of economics at Pace University, and editor of the Quarterly Journal of Austrian Economics. Professor Salerno also held the inaugural John V. Denson II Endowed Professorship in the economics department at Auburn University.