Before we look for remedies, we must examine the causes. The sources of inflation can be diagnosed at several levels. The familiar debate about the sources of violence provides an analogy. The first view holds the central bank primarily responsible for inflation, the second the government in general, the third the people who elect and instruct the government. In addition, time preference, the social discount rate, enters into the equation.
Inflation usually is the final link in a chain of well-meant actions.
The benefits of a tax cut, of increased public spending, are felt within a few weeks or quarters. The penalty in terms of inflation may not come until after a couple of years or even later. Life, to be sure, is a succession of short runs, but every moment is also the long run of some short-run expediency of long ago. These consequences are as unacceptable as rain on weekends and just as easy to change. If we continue to meet current problems with new short-run devices, the bill will keep mounting.