"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"

Friedrich August von Hayek draws attention to the recurring pattern throughout history where inflation arises not as the result of natural economic processes, but as a consequence of intentional policies pursued by governments. He suggests that the manipulation of a nation’s currency—by increasing the money supply beyond what is warranted by real economic growth—has often been deployed as a tool by those in power. Such actions are usually motivated by short-term political or fiscal gains, including the financing of wars, public works, or welfare schemes without the unpopular necessity of direct taxation.

Hayek’s contention challenges the conventional understanding of economic cycles as simply the result of impersonal market forces. Instead, he implies that inflation is an artificial phenomenon, orchestrated to serve the interests of the state or the ruling elite. When a government prints more money, it can temporarily stimulate demand and alleviate fiscal constraints. However, this comes at the cost of devaluing currency, eroding purchasing power, and unfairly redistributing wealth—usually to the detriment of wage earners and savers, and to the benefit of debtors and those who have privileged access to new money.

Historically, episodes of significant inflation—ancient Rome’s debasement of coinage, hyperinflation in Weimar Germany, or more recent crises in Zimbabwe and Venezuela—bear out Hayek’s assertion. Rather than serving the public good, these inflations often led to societal turmoil, loss of trust in institutions, and economic hardship, all precipitated by government intervention. Hayek warns that the authority to control money is a dangerous power, too often wielded for the expedience of those who govern, rather than the welfare of the governed. His observation underscores the critical importance of restraining government influence over monetary policy to protect economic stability, individual liberty, and the integrity of historical progress.