WHAT IS NOWADAYS called governmental monetary management encompasses two kinds of policy. It is on the one hand deficit spending, i.e., undisguised inflation to enable the government to spend beyond the amount of funds collected by taxation or borrowed from the public. It is on the other hand a policy of easy money, i.e., of attempts to lower the market rate of interest by credit expansion.
The governments as well as their henchmen are fully convinced that this expansionist policy is highly beneficial to the immense majority of all decent people. They emphatically deny that increasing the quantity of money in circulation is what economists, politicians, and all sane people used to call and still call inflation. As they see it, inflation has nothing to do with the quantity of money in circulation; it is rather a reprehensible procedure of greedy businessmen that ought to be prevented by government control of prices. Interest is, in the eyes of the official doctrine, essentially a factor hindering the development of “really productive” business. Such a doctrine views interest as a tribute that the industrious members of society are compelled to pay to a race of lazy moneylenders.