Why Does The Power Of The Hard Money/Fiscal Austerity Orthodoxy Persist?

by: Cullen Roche

Doc K asked an important question on his blog this weekend – how, after all of these years of being dreadfully wrong, do the Austerians and inflationistas still garner so much attention? I think it’s simple:

  1. The idea that inflation is always bad is very simple to digest (even though it’s wrong).
  2. The idea that the government is always bad is very simple to digest (even though it’s wrong).

Of course, the economists and pundits who have been touting these views for the last half decade have been largely discredited. But politicians and the people who really matter don’t cater to economists. They cater to the general public. And the general public doesn’t waste their time thinking about nerdy things like the operational realities of the monetary system.

In addition, a huge portion of the US population still thinks the government can’t do anything better than the “free market”. After all, this is a country built largely on the rejection of “big government”.

Combine those two perspectives together and you get an environment that is perfect for embracing the simple message that the hard money crowd promotes.