The most valuable part of the contract may turn out to be the paper it is written on. This condition is hard to reconcile with simple honesty. If our contracts were made in terms of unpredictably shifting measures of weight, time or space, as we buy food, sell our labor or acquire real estate, we would probably regard that as cheating and as intolerable. Yet the case is much the same when we are dealing with monetary values. The moral issues posed by inflation go beyond what I consider deceit.
Inflation is a means by which the strong can more effectively exploit the weak.
The strategically positioned and well-organized can gain at the expense of the unorganized and the aged. In the eyes of economists and of government, inflation becomes a means of exploiting labor's money illusion, its supposed failure to anticipate inflation correctly. It is believed that labor will respond to a seemingly large wage offer that subsequently is eroded by inflation. If labor fails to notice the trick, it will keep working for less than it really had demanded, and employment will be higher. A government pretending to serve a nation's interest by, say, misinforming the people about its military plans would be harshly taken to task.