July 17, 2010 (LBO) – A former Sri Lankan central banker has written a book that can open the eyes of third world policy makers and impoverished citizens helping them escape state-induced poverty caused by high inflation. “Money does not raise economic growth, but it is the fundamental cause of high rate of inflation that is detrimental to economic growth,” H N Thenuwara, a former assistant governor of Sri Lanka’s central bank says frankly in a newly released book.
“High inflation and low economic growth jointly account for the poverty of nations.”
Many so-called ‘third world’ states which restricted the economic freedoms of their citizens and kept growth down also appropriated their wealth stealthily through an ‘inflation’ tax slashing the real value of people’s salaries and lowering their living standards.
High inflation is usually created by using central bank credit (printed money) to finance budget deficits, by governments that do not collect enough taxes to finance expenditures and also do not want to borrow at market rates.
Though increasing economic freedoms of people and reducing state controls (open economies and liberalization) can create real jobs, even the employed will remain poor in such