Conventional wisdom tells us that high rates of inflation damage the economy by distorting markets, undermining public faith in government and forcing all sorts of wasted effort. The corporate environment is also being influenced by low inflation. Boosting sales and profits to record levels is more difficult without the benefit of inflation. Many executive compensation packages depend on reaching ever higher levels of corporate financial success. Income tax collections lag as taxpayers remain in lower tax brackets.
Truth is, government has grown to depend on inflation for ever increasing revenue.
Politician s propensity to announce future spending projects to be paid with inflated future tax revenue has been the norm. In spite of the dubious condition of the world economy, U.S. economists see no threat on our horizon. Stock market performance has routinely broken records and predictions. Corporate earnings are impressive. Unemployment is almost nonexistent.