Stagflation

About ten telephone calls made it clear that the word Stagflation had been invented in the Netherlands.

In the first week of April 1981 we took a plane to the Netherlands and began a research in the Central Bureau for the Statistics in Rijswijk in the Netherlands. Within 96 hours, after an additional visit to "HetRijks Prenten Kabinet" (The Dutch archive of all Dutch publications) it had become obvious what had caused the first symptoms of Stagflation.

They appeared in the Netherlands in 1963 for the first time and began their confusing working during 1964 resulting in an increase in unemployment in 1965 while the order portfolios of the country were overloaded. There was de facto a shortage of workers to do all the work available. Unemployment began nevertheless to rise.

Three months of checking all the collected facts showed that, for no reason at all, in 1981 the Netherlands were developing a consistent increase in unemployment. The unemployment could develop because the leading authorities in the country, just as all the leading authorities in the rest of the world did not understand the real reasons for the development of Stagflation. Consequently they reacted with old fashioned inflation rules that had not a single root in any form of science. Those rules had only developed from empirical observations.

In June 1981 Hank Monrobey decided to go back to the Netherlands and to TRY to inform leading financial and economic personalities about the consequences of their existing money circulation policies. However, in 1981 we had not developed sufficient understanding of all the scientific elements involved in the process. We were not capable of underpinning every conclusion with sufficient scientific motivation.

However, we made it quite clear that without changing the policy the country would become confronted with more than one million unemployed in a country with only fourteen million citizens. We traveled for three month through the country and spoke with a large number of politicians, bankers, union leaders and high level business managers. We wrote letters to those political leaders that we could not reach with a verbal explanation. From several of them we received a written appreciation of our efforts to inform them. However, nothing happened.

I received even a letter from today's Prime Minister Willem Kok who was in 1981 a powerful upcoming man from the ranks of the Labor Unions. He confirmed his appreciation of my work, but could not agree with my point of view that the country had not been tortured by inflation. He wrote that it was so obvious that the country was confronted with inflation, because the people had to pay more dimes for their purchases. How wrong he was, you will discover in these lessons.

This letter proved that everyone, including leading politicians had a totally wrong idea about the development of inflation. We will deal with this issue again in the first lesson.

An in depth Research.