Thursday, April 01, 2010

The Social Costs of Inflation

I've written many posts on inflation and hyperinflation, but perhaps none of them offer the psychological insight Aleksandr Solzhenitsyn offers in his novel November 1916:

"The soaring cost of living isn't just a matter of high prices--it goes with a particular state of mind, a universal dread.  If things are worse today than yesterday, what will they be like tomorrow?  It's a peculiar feeling of despairing defenseless that comes over you whenever you buy something in the market.  Unmanageable prices throttle you.  Invisible people, enormously rich already, are concealing goods somewhere nearby, behind that stone wall perhaps, and choking every last kopeck out of you!  Outraged, you imagine that these profiteers, these sharks, are encouraged by the government and have the police in their pay.  What other explanation can any ordinary person find for the government's failure to curb these highway robbers?  It's impossible to believe that there's no food to be had in Russia, Russia always has plenty, so why is there none in the shops?  Obviously they're concealing it to fleece the customer.  This and nothing else is what people most resent about the government."

Aleksandr Solzhenitsyn November 1916, page 172

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