The author defines “techno-asset inflation” as the interaction of monetary inflation and technological revolution that suppresses goods-price rises while driving intense asset-price inflation.

Historical parallels from the sixteenth-century Northern Renaissance (precious-metal inflows plus printing press and globalization) to today’s digital/AI era show how positive supply shocks camouflage monetary excess, benefiting governments, monopolists and crony interests while fostering malinvestment.

Current conditions under the 2% inflation standard and multi-decade tech boom are viewed as a high-risk episode of techno-asset inflation, with little indication that central banks are prepared to confront asset-price dangers rather than focus narrowly on consumer-price targets.

There is nothing new about the perils for peace and liberty which stem from the combination of monetary inflation and technological revolution. Indeed, we can find a prime illustration at the dawn of the modern age during the Northern Renaissance in Europe.

But first, towards better describing the peril, I urgently propose a new entry into the economics dictionary: techno-asset inflation. The definition is this: techno-asset inflation is found where monetary inflation and technological revolution interact to produce virulent asset inflation.

The positive supply shock emanating from the technological revolution bears down on goods and services prices. This expands the scope for monetary inflation by impeding an intensification of its symptoms in goods and services markets. Serious symptoms can trigger serious popular resentment. Under these circumstances it is in asset markets rather than goods markets that symptoms of monetary inflation are likely to become most severe. (Note that many asset inflations occur outside technological revolutions; some of these are twinned with positive supply shocks in the form of previous shortage whether due to for example famine, war, or cartel action, going into reverse).

Asset inflation in some of its phases can be popular. That is the case, for example, when there are widespread wealth gains which outweigh—in electoral arithmetic—the diminished or negative returns on government bonds and money. Simultaneously asset inflation might well be beneficial for some key actors, including—with some overlap— big government, election campaigners, crony capitalists and monopolists. These benefits, though, are problematic for a free society. And the malinvestment which is intrinsic to asset inflation eventually takes its toll on prosperity and can stimulate political extremism.

The asset inflation threat is now at a high level—comparable to dangerous episodes in history all the way back to the Northern European Renaissance in the sixteenth and early seventeenth centuries. Yet there is no apparent awareness of the peril in the news about the Fed’s........

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