Are 10 Years of Inflation on the Cards? Some Food for Thought


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Les Nemethy has been warning that we were facing a period of high inflation since long before it was fashionable. Now, he believes that on the balance of probability, we face an entire decade of high inflation.

That’s not to say that inflation cannot decrease at times during the decade, during a recession, for example. In the 1970s there were ups and downs; overall, it was still one of the most inflationary decades on record.

In the first part of this article, I will briefly summarize my reasons for my “decade of inflation” prognosis. In the second part, I will offer evidence that inflation is not accidental but a deliberate act of government theft. Then I’ll offer some conclusions.

This summary does not purport to be comprehensive, but it does lay out five of the great inflationary structural changes in the world today.

1) Deglobalization: Factories are no longer built where factor costs are optimized; supply chain security has become a much more significant consideration. This inevitably results in higher prices, as do interruptions to supply lines and the need to stock more inventory.

2) Demographics: A demographic implosion makes the workforce more scarce, putting upward pressure on labor costs.

3) Green Energy: Put simply, it is more expensive than fossil energy. The more we substitute fossil fuels with green energy, the more it drives up energy costs. A dearth of green energy minerals will further drive up energy costs. Policy shifts towards green energy have made fossil fuel providers reluctant to invest in expanding or even replacing fossil fuel capacity for fear of being left with stranded assets; hence, fossil fuel prices are also driven up.

4) War Economy: Just as the United States tried to achieve “guns and butter” in the late 1960s and 70s (the Viet Nam war and Johnson’s “Great Society”), so too, governments today are spending lavishly on everything from COVID relief to social security, while the Ukraine war (and other conflicts or threatened conflicts) are increasing military spending. An expanded money supply funds deficit financing.

5) Government Bank Loan Guarantees: These are experiencing surprising growth on both sides of the Atlantic, encouraging banks to lend more, once again fuelling growth in money supply and inflation.

In defense of the proposition that inflation is not accidental, but a deliberate act of theft, I offer the thoughts of several great thinkers. These are some of my favorite quotes on inflation:

J.M. Keynes: “By a continuing process of inflation, government can confiscate, secretly and unobserved, an important part of the wealth of its citizens.”

Ludwig von Mises: “The most important thing is to understand that inflation is not an act of God, it is not a natural disaster, and it is not a disease. Inflation is a political strategy.”

Friedrich A. Hayek: “I do not think it is an exaggeration to say history is largely a history of inflation, usually inflations engineered by governments for the gain of governments.”

Warren Buffet: “Most of those in political office, quite understandably, are firmly against inflation and firmly in favor of policies producing it.”

Ernest Hemingway: “The first panacea of a mismanaged nation is inflation of the currency; the second is war. Both bring a temporary prosperity; both bring a permanent ruin. But both are the refuge of political and economic opportunists.”

William Ophuls, author of “Immoderate Greatness: Why Civilizations Fail.”: “Inflation is always an evasion of reality, an attempt to maintain an artificial prosperity. [ …. Leaders] have been backed into a corner by events and lack the moral courage or the political support to institute fundamental reforms, which would require them to inflict pain on the mass of commoners and vanquish powerful elites [...] [R]ulers bereft of backbone, ingenuity, and capital attempt to postpone the impending crisis by inflating.”

Ayn Rand: “Inflation is not caused by the actions of private citizens, but by the government: by an artificial expansion of the money supply required to support deficit spending. No private embezzlers or bank robbers in history have ever plundered people’s savings on a scale comparable to the plunder perpetrated by the fiscal policies of statist governments.”

Ludwig von Mises: “Inflation, however, can only continue as long as there is the opinion that it will cease in the foreseeable future. Once the conviction is established that inflation will not stop, panic breaks out.”

In conclusion, I might add that probably the only politically palatable way that politicians can make our debt levels more manageable again is to inflate them away by keeping the inflation rate a few percentage points higher than the interest rate. 

Given that we are facing the highest amount of debt ever accumulated by humanity, some 370% of global GDP, there will be very little option but to inflate it away. Perhaps this is even the responsible course of action.

Les Nemethy is CEO of Euro-Phoenix Financial Advisers Ltd. (, a Central European corporate finance firm. He is a former World Banker, author of Business Exit Planning (, and a previous president of the American Chamber of Commerce in Hungary.

This article was first published in the Budapest Business Journal print issue of May 5, 2023.

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