The First National City Bank of New York keeps score annually. Its table published in August, 1968, shows the currency depreciation in 45 countries, in 1967 and over the preceding 10 years, as measured by cost-of-living indices.
The table shows that in every one of the 45 countries the purchasing power of the monetary unit declined in the 10-year period 1957-67, and that the rate of decline in the value of money in 1967 exceeded the 10-year average in 27 of those countries. The median rate of depreciation in the 45 countries in 1967 was 3.8 per cent, compared with a median rate of 3.3 per cent a year for the decade as a whole.
The buying power of the United States dollar suffered a rate of shrinkage of 2.7 per cent in 1967, compared with an average rate of 1.7 per cent a year over the past decade. (The dollar’s purchasing power shrank by 4.0 per cent during 1968.)
At the end of 1967 the United States dollar bought only 84 per cent as much as it bought 10 years before. On the same 10-year basis of comparison Canada’s currency bought only 82 per cent as much, Belgium’s 80, West Germany’s 79, Switzerland’s 76, the United Kingdom’s 75, Holland’s 73, Italy’s 71, Sweden’s 69, Japan’s 66, France’s 62, India’s 54, Spain’s 50, Vietnam’s 31, Chile’s 11, Argentina’s 6, and Brazil’s only 2 per cent as much.
The three countries with the worst records were Latin American countries; but so, remarkably, were the three countries with the best records. These were Guatemala, whose currency in 1967 still bought 99 per cent as much as it did 10 years before; El Salvador, whose currency bought 94 per cent as much; and Venezuela, whose currency bought 88 per cent as much.
This contrast shows that the extent of inflation has nothing to do with the wealth or resources of a country. It is certainly not the result of a “scarcity of goods.” It is true that Argentina and Brazil are not outstandingly rich countries, but the nations that suffered from inflation least, Guatemala and El Salvador, are among the poorest in the world.
The truth is that inflation is always the result of governmental policy. It is a consequence of printing too much money.
If the Citibank’s table had compared not only the extent of the fall in buying power of each of the 45 countries’ currencies, but also the respective increases in the amount of money issued by each country, this fact would have been made clear. Digging these comparisons out myself from the monthly publication of the International Monetary Fund, International Monetary Statistics, I find that in Guatemala, for example, the supply of currency was increased from 120 million quetzales in 1957 to 157 million in 1967, a rise of only 31 per cent. In Brazil, by contrast, the supply of money was increased from 291 million new cruzeiros in 1957 to 19,593 million in 1967, a rise of 6,633 per cent. This is sufficient explanation of the fact that the Guatemalan currency lost only 1 per cent of its purchasing power in the 10-year period while the Brazilian currency lost 98 per cent of its former purchasing power. Similar comparisons could be made for the other countries.
The governments that have done most to expand their issuance of money have done so, or have “had” to do so, because they plunged into welfare schemes and socialistic programs that brought on enormous chronic budget deficits.
In their rush to bring perpetual prosperity and to “end poverty” in their own lands they have eroded the value of their own people’s savings and left millions of their most hard-working and thrifty citizens facing the specter of poverty.