ABSTRACT
The title "The Fight Against Inflation" is chosen not because inflation is the only aspect of the economy on which government should have a policy, or indeed because the conquest of inflation is the only goal. The defeat of inflation is a worthwhile goal in its own right. For inflation is socially divisive. It redistributes wealth in an arbitrary way. It exacerbates tension over pay bargaining, as employees struggle to maintain their real incomes. By the early 1970s, the strains imposed by inflation, disparities in economic performance and the weakness of the dollar forced the abandonment of the fixed exchange rate system. Squeezing inflation out from an economy which has become accustomed to high rates over a period of years cannot be an easy or painless task. It is not sufficient to apply anti-inflationary policies for a brief period. That would not permanently conquer inflation and it would condemn us to a continuation of our long economic decline.
