Monetary inflation has now become the explicit policy of the U.S. Government. Of course, based on the historical record, you would think that inflation has always been government policy. But, at the official level, monetary stability has always been given lip service as the government’s avowed goal. After years and years of inflation, however, those pronouncements have had about as much credibility as a drunk staggering out of a bar and telling you that sobriety is his avowed goal.

Up until the appointment of Ben Bernanke as Chairman of the Fed, every one of his predecessors, to and including Alan Greenspan, pronounced the elimination of inflation as one of the Fed’s primary goals. All of this, of course, while the value of the dollars in our pockets was steadily depreciating thanks to the flood of paper money being created by the Fed and the banking system day after day and year after year.

When he came onboard as Fed Chairman, Ben Bernanke, to his credit, abandoned the pretense of trying to achieve zero inflation. Instead, he proposed “inflation targeting,” that is, attempting to hold inflation down to a low level, say two percent, rather than trying to eliminate it entirely. So what they call “tame” inflation has now become official policy.

The obvious question of course is why? According to mainstream economists, it is because the economy cannot grow without steady increases in the money supply. Therefore, they say, the choice is between either a little bit of inflation or recession/depression. Putting aside whether or not that is true (hint: it’s not), the problem is that we rarely have a little bit of inflation.

In the last post I talked about the joke known as the Consumer Price Index. Unfortunately it’s not really funny. The CPI is the basis on which cost of living adjustments for social security recipients are calculated. Because it understates inflation on a year over year basis, those who can least afford the effects of inflation are being further impoverished by it. But on the plus side, from the government’s point of view, it saves large amounts of money that can be spent on farm subsidies, stupid wars and other things that are more important than food and housing for the poor.

But I do admire Bernanke for abandoning the pretense of achieving zero inflation. Under our current funny money system that can never happen and I give him credit for admitting it.

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