The late great Milton Friedman declared that "inflation is everywhere and always a monetary phenomena." He said this at a critical time in our policy history, and his work on the history and theory of monetary mischief persuaded the bulk of his professional peers, policy makers, and the general public. Friedman's intellectual victory was indeed a glorious one.
A little over 15 years ago now, Thomas Sargent remarked during a seminar I was participating in that Friedman's dictum had to be slightly modified. Yes, inflation is everywhere and always a monetary phenomena, but it is also true that hyper-inflation is everywhere and always preceded by a fiscal imbalance. In other words, the endless cycle of deficits and debt produces debasement.
Gerald O'Driscoll now reports a similar conclusion drawn by Allan Meltzer -- no country that spends as we have can escape inflation. O'Driscoll actually reports that throughout the crisis he has found the most persuasive work being done by Anna Schwartz, John Taylor and Meltzer, and that he has in fact viewed his own work consistently Austrian throughout. I agree with him.
What does that tell us?