"Forty Centuries of Failure:
Price Controls, Debasement and Tyranny"
by Mark E. Jeftovic
Excerpt: "It hasn’t worked once, so why would a politician go all-in on price controls now? August 15th was the anniversary of the infamous “Nixon Shock”, when excessive spending and trade deficits had governments on the ropes, as prices climbed relentlessly, inflation soared into the double digits, while economic growth stalled. In 1971 of that year, Nixon “temporarily” suspended convertibility of the US dollar for gold (still in effect), while simultaneously proclaiming a 90-day freeze on all wages and prices across the United States.
The stagflationary 70’s also saw Trudeau the 1st enact “The Anti-Inflation Act of 1975”, with his infamous “6 and 5” measures (a 6% cap on wage increases with a 5% cap on prices was supposed to put 1% back into the pocket of the peasants).
None of this worked, and as the lumpenpublic were mulched by higher prices and growing government, gold served as a barometer to it all – soaring from $35/oz at the time of the Nixon Shock to $850/oz in 1980 (that all-time high still won’t be exceeded in inflation adjusted terms until gold cracks about $2,580).
It took Paul Volcker to get inflation under control with double-digit interest rates – (when the news came that he had been elevated from President of the New York Fed under Gerald Ford to Chairman by Jimmy Carter, Volcker’s wife burst into tears).
Today, 50 years later with a monetary regime that makes the 70’s look austere, double-digit interest rates are simply not an option – we’ve just seen a 5-sigma event nearly blow up the global monetary system from the BoJ nudging interest rates from the zero bound to 25bps. With an unprecedented levels of monetary expansion and debt levels somewhere beyond nosebleed elevations, policy-makers and central bankers are trapped.
This is why we’re seeing a resurgence in popular rhetoric around the idea of price controls – everywhere from Jagmeet Singh here in Canada, who blames grocery store CEOs for inflation, to Dem nominee and incumbent Vice President Kamala Harris, channeling him with promises of food price controls as part of her election campaign.
The definitive chronicle of price controls throughout recorded history comes to us by way of Robert L. Schuettinger and Eammon F. Butler’s “Forty Centuries of Wage and Price Controls” – or “How Not to Fight Inflation“. I could not for the life of me find my hard copy, but during the depths of the Global Financial Crisis, The Mises Institute saw the value in republishing it…
“By special arrangement with the authors, the Mises Institute is thrilled to bring back this popular guide to ridiculous economic policy from the ancient world to modern times. This outstanding history illustrates the utter futility of fighting the market process through legislation. It always uses despotic measures to yield socially catastrophic results.”
It starts as far back as Urakagina of Lagash, a King of Sumeria in around 2350BC who came to power and overturned wage and price controls held in place by an unnamed line of despotic predecessors: “He began his rule by ending the burdens of excessive government regulations over the economy, including controls on wages and prices…"
An historian of this period tells us that from Urakagina, "We have one of the most precious and revealing documents in the history of man and his perennial and unrelenting struggle for freedom from tyranny and oppression." This document records a sweeping reform of a whole series of prevalent abuses, most of which could be traced to a ubiquitous and obnoxious bureaucracy …it is in this document that we find the word ‘freedom’ used for the first time in man’s recorded history; the word is ‘amargi’.“ It is somewhat telling to find that the word “freedom” was seemingly coined to describe the end of price controls."
Full article is here:
Freely download “Forty Centuries of Wage and Price Controls”
– or “How Not to Fight Inflation“ here:
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