Keynes on the Consequences of Inflation

All good economists can agree with one statement Keynes made early in life in his 1919 book, The Economic Consequences of the Peace, which helped make him a public figure, and is well worth taking the time to read:

Lenin is said to have declared that the best way to destroy the Capitalist System was to debauch the currency. By a continuing process of inflation, governments can confiscate, secretly and unobserved, an important part of the wealth of their citizens. By this method they not only confiscate, but they confiscate arbitrarily; and, while the process impoverishes many, it actually enriches some. The sight of this arbitrary rearrangement of riches strikes not only at security, but at confidence in the equity of the existing distribution of wealth. Those to whom the system brings windfalls . . . become "profiteers," who are the object of hatred of . . . [those] whom the inflationism has impoverished . . . As the inflation proceeds . . . the process of wealth-getting degenerates into a gamble and a lottery. Lenin was certainly right. There is no subtler, no surer means of overturning the existing basis of society than to debauch the currency. The process engages all the hidden forces of economic law on the side of destruction, and does it in a manner which not one man in a million is able to diagnose . . . The governments of Europe . . . are fast rendering impossible a continuance of the social and economic order of the 19th century.