Mises Institute The Not-So-New Dollar Strategy: Monetize Productivity in Advance
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Feb 4, 2026 Brendan Brown, author and monetary commentator, warns about monetizing a supposed productivity surge. He explains how central banks can use productivity claims to justify easy money. He traces historical precedents of asset inflation tied to such policies. He highlights political incentives and the risks of premature stimulus leading to malinvestment and a damaging bond-market reversal.
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Premature Monetization Risk
- The Fed is monetizing a claimed productivity surge before clear evidence of a sustained rise exists.
- This preemptive monetization risks camouflaging monetary inflation in goods markets while inflating assets.
Historical Pattern Of Asset Inflation
- Monetizing productivity surges historically links to asset inflation, malinvestment, and overleverage.
- Past episodes (1922–28, 1952–65, 1995–2006) ended with asset crashes and economic pain.
Politics Behind Low Rates
- Modern Fed policy deliberately uses productivity spurts to justify stimulatory rates rather than acting passively.
- That approach politically benefits debtors, homeowners, asset holders, and big government via higher asset prices and tax revenue.