I’ve read some truly moronic claims in the mainstream media the past week, but this may take the cake. Time Magazine, apparently, wants to make the case that the fiscal responsibility and monetary restraint Governor Palin and the Tea Party advocate will result in hyperinflation. You can’t make this up. Ed Morrissey does a masterful job of illustrating the economic illiteracy and outright idiocy required to make such an allegation:
If hyperinflation arrives, Time Magazine wants its readers to know who the real culprits are. It won’t be the federal government that hiked annual spending by 38% in three years and began running trillion-dollar deficits. It won’t be the Congress that kept raising debt limits to allow for that spending spree. And it won’t be the Federal Reserve that, in desperation over the government’s spending and debt spree, began printing money to artificially keep interest rates low. No, the real culprit will be the political movement that opposes all of the above, according to The Curious Capitalist:
Perhaps at some point, Mr. Curious (or Mr. Capitalist) can explain why we had runaway inflation in the 1970s even with a low debt-to-GDP ratio and a predilection for higher taxes. Curiously, when we started cutting taxes in the 1980s, that inflation disappeared, and remained under control during a long period of low tax rates, especially in the 1980s and in the last decade as well. Those years of low taxes, low inflation, and consistently high real growth in GDP would tend to argue that tax cuts don’t create inflation but actual growth — as well as confidence in both the economy and the currency.
Uncontrolled inflation doesn’t get created from tax cuts; it arises from bad monetary policy, ill-advised government interventions, and a serious lack of confidence in the currency. Tax cuts uncoupled from spending cuts can certainly make for bad policy and set the stage for inflation, but all one has to do is look at the last nine years of stable tax rates and the runaway rate of spending increases in Washington to determine where the actual problem lies. It’s not the tax rates that kept changing, nor is it a decline in revenue that created the massive deficits. For most of the last ten years, revenues have increased, with the exception of the last two years of deep recession; the deficit problem resulted from spending increases that have far outstripped the revenue increases.
It’s well worth your time to go to Hot Air and read the whole thing. This Time Magazine piece is stunningly asinine, and it’s amazing that they would even print it. If Time is intent on following in the steps of Newsweek, they’re certainly going about it the right way.