A Drinking Man’s Guide to Monetary Policy

“Just like drinking, expansionary monetary policy can provide a temporary (or transitory) high at first (faster real output growth and reduced unemployment). However, the ill effects come later (in an inflation “hangover”).

(Inflation is the creation of currency and credit out of thin air. The consequence of inflation is an inflationary rise in prices. JRD)

“Once a tolerance to drink or expansionary monetary policy is established, withdrawal symptoms worse than any hangover can result if you stop (as in a stagflation scenario that haunts the dreams of all those making fearful references to the 1970s), especially if it is unexpected. Further, that hangover is likely to persist awhile (to decelerate inflation) before you feel better again and can get back to a “normal” life.

Such withdrawal symptoms also mean efforts to stop either expansionary monetary policy or drinking are often short-lived, as the adverse effects tend to come first, while the positive effects come later. That may tempt decision-makers to yield to short-run pressures to feel better now (drink again, possibly excused as taking a “hair of the dog” cure) or by returning to inflationary policies, despite the adverse long-run consequences.”

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(A simple article to understand the corruption of the creation of currency and credit out of thin air by the Federal Reserve and the banking system to allow an abomination to God of spending by the state and its beneficiaries—at the expense of all others. JRD)