"I do not think it is an exaggeration to say history is largely a history of inflation, usually inflations engineered by governments for the gain of governments"
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Hayek is doing something sly here: he smuggles a moral indictment into what sounds like a calm, empirical observation. “I do not think it is an exaggeration” performs restraint, the intellectual’s version of lowering his voice before delivering the accusation. Then he lands the payload: inflation isn’t an accident of modern capitalism or a natural fever in the body politic; it’s a recurring instrument of statecraft, “engineered” rather than endured.
The subtext is classic Hayek: governments can’t resist the temptation to spend beyond what voters would tolerate if the bill arrived honestly. Inflation becomes the stealth tax that doesn’t require a roll-call vote. It shifts wealth from savers to debtors, from wages that adjust slowly to state obligations that get easier to pay back in cheaper money. “For the gain of governments” narrows the suspect list. This isn’t a vague complaint about “mismanagement.” It’s an allegation of incentive: political institutions are structurally rewarded for short-term relief and punished for long-term discipline.
Context matters. Hayek wrote in the shadow of two world wars, the Great Depression, and the rise of technocratic macroeconomic management. Across Europe and beyond, extraordinary public debts, currency crises, and postwar reconstruction made monetary expansion feel like necessity. Hayek’s point is that “necessity” is often the story power tells itself. By recasting inflation as a political technology, he aims to strip it of neutrality and force a harder question: if money is a public trust, why is its debasement so reliably convenient for the people who control it?
The subtext is classic Hayek: governments can’t resist the temptation to spend beyond what voters would tolerate if the bill arrived honestly. Inflation becomes the stealth tax that doesn’t require a roll-call vote. It shifts wealth from savers to debtors, from wages that adjust slowly to state obligations that get easier to pay back in cheaper money. “For the gain of governments” narrows the suspect list. This isn’t a vague complaint about “mismanagement.” It’s an allegation of incentive: political institutions are structurally rewarded for short-term relief and punished for long-term discipline.
Context matters. Hayek wrote in the shadow of two world wars, the Great Depression, and the rise of technocratic macroeconomic management. Across Europe and beyond, extraordinary public debts, currency crises, and postwar reconstruction made monetary expansion feel like necessity. Hayek’s point is that “necessity” is often the story power tells itself. By recasting inflation as a political technology, he aims to strip it of neutrality and force a harder question: if money is a public trust, why is its debasement so reliably convenient for the people who control it?
Quote Details
| Topic | Money |
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