Popularly, a rise in prices of goods and services; in economics, monetary expansion


Glossary: Inflation, by Percy L. Greaves Jr., Mises Made Easier, 1974
"In popular nonscientific usage, a large increase in the quantity of money in the broader sense (q.v.) which results in a drop in the purchasing power of the monetary unit ... A more precise concept for use in theoretical analysis is any increase in the quantity of money in the broader sense which is not offset by a corresponding increase in the need for money in the broader sense, so that a fall in the objective exchange-value (purchasing power) of money must ensue. ..."
Inflation - Wikipedia, the free encyclopedia
"In economics, inflation is a change in some important measure of money which says either real or apparent value is falling. The two most obvious versions of this, each held by some economists to be 'real' inflation, are for prices to rise compared to the currency in question, or for more of that money to be added to the economy. ..."


12¢ Hamburgers and $600 Cars, by Mark Brandly, Mises Daily, 25 Oct 2006
"Government agencies report price inflation. If they reported monetary inflation, the inflation estimates would be much higher. The Federal Reserve expands the money supply, driving prices up. However, by reporting price inflation as they do, the ruling elite lay claim to much lower inflation rates."
A Mission to Beijing, by Vin Suprynowicz, Las Vegas Review-Journal, 24 Dec 2006
"What Messrs. Paulson and Bernanke have been ... telling ... in effect, is '... we're actually going to print enough paper confetti dollars to increase the world's dollar supply by 10 percent a year. That's 10 percent inflation,' — rising prices are only a sign of inflation, remember, not its cause — 'which means a worker getting a 3 percent raise actually loses 7 percent of his buying power every year ...'"
Austrian "Inflation," Austrian "Money," and Federal Reserve Policy, by Richard Timberlake, The Freeman, Sep 2000
Response to Joseph T. Salerno's October 1999 article which critiqued Timberlake's essays in the April, May and June 1999 issues; discusses the words "inflation" and "money" and Federal Reserve policies, in an Austrian economics context
"Whether the word 'inflation' is 'new' or 'old and venerable' is largely irrelevant to substantive issues. 'Inflation' is a word that has emerged in economic thought and theory because of institutional developments and intellectual progress in methods of economic measurement. It is useful as no other word can be for describing general price-level increases."
Cantillon, Richard (c.1680-1734), by George H. Smith, The Encyclopedia of Libertarianism, 15 Aug 2008
Biographical essay
"Cantillon offered a detailed analysis of inflation. Although the 'quantity theory' of money, according to which the injection of new money will cause a general increase of prices, was known to earlier theorists (e.g., John Locke), Cantillon was the first to explain the differential effects of inflation on the structure of prices. This differential impact, which depends on which segments of the economy are the earliest recipients of the new money, has become known as the 'Cantillon effect.'"
Crushed by the Fed, by Kane, Future of Freedom, Jan 2008
Discusses the role of the Federal Reserve in supposedly "controlling inflation and running the economy"
"Inflation is not some natural rise in prices but instead an increase in the supply of money, which in turn gives rise to the general level of prices in the economy. ... Incidentally, before 1900, chronic inflation was not a problem in the United States; the purchasing power of a dollar in 1900 was very close to what it was in 1800. Since the Fed's creation, however, the dollar has lost 95 percent of its purchasing power."
Related Topic: Free Market
Don't Believe Those Inflation Numbers, by Mark Brandly, Mises Daily, 1 Sep 2006
Discusses how the Bureau of Labor Statistics reported inflation rates are unlikely to be a true reflection of the actual increases in prices of goods
"In addition to underreporting inflation, the feds also want to conceal the cause of inflation. Federal Reserve policies pump up the money supply creating the inflation. ... The Fed is essentially blaming inflation on rising prices. Inflation is the rise in prices. This is like the thief blaming his victim's loss of money on the victim's thinner wallet. ... They position themselves as inflation hawks, although they are the cause of the problem."
Related Topics: Government, Taxation
Friedman, Milton (1912-2006), by Aaron Steelman, The Encyclopedia of Libertarianism, 15 Aug 2008
Biographical essay
"Inflation, Friedman famously argued, was 'always and everywhere a monetary phenomenon.' It is not fundamentally caused by unions demanding higher wages for their members, thus increasing labor costs and the prices of goods. Nor is it a product of companies wielding expansive market power and charging monopolistic prices. Instead, it is caused by too much money chasing too few goods. Central banks, Friedman concluded, should focus narrowly on maintaining price stability and adopt rules that would ensure such an outcome."
Government Money Deserves a "Swift" Abolition, by Nicholas Curott, Mises Daily, 5 Oct 2006
Recounts Jonathan Swift's campaign against currency debasemen in 18th century Ireland and decries modern day inflation brought on by government-controlled money
"Governments in the 20th century were no longer restrained in how much money they could print, and the age of inflation was ushered in. The damage caused by this inflation is incalculable. Even in America the damage is great. By entering into the economy through the credit market, inflation is responsible for economy-wide business cycles. ... Most people are rationally ignorant of the destructiveness of inflation. But if they really understood, they would be outraged by it."
Related Topic: Money
Inflation Deflation Red-flation Blue-flation, by Matthew Beller, Mises Daily, 24 Jul 2008
Explains what is inflation, what is money, contrasts "bad" vs. "not-bad" inflation and analyses the Federal Reserve's recent and potential actions
"The most commonly used definition of inflation — a general increase in the prices of goods and services — is probably the least descriptive, and it is certainly the most misleading. ... Furthermore, use of this definition also leads to such ridiculous terms as 'food inflation' to describe price increases in a few specific agricultural commodities."
Related Topic: Banking
Inflation Is Legalized Robbery, Part 1, by Gregory Bresiger, Future of Freedom, Dec 2006
"Inflation is a tax because only the government creates money. ... You don't see the costs of inflation listed on a pay stub but its fearsome power eats away at your income. It is the sneakiest tax because most Americans don't understand who or what causes it and why. Therefore, I believe, inflation is the greatest, most effective, form of robbery in history."
Inflation Is Legalized Robbery, Part 2, by Gregory Bresiger, Future of Freedom, Jan 2007
"This inflation-can-be-good philosophy appeared at the same time as the post-Great Depression Keynesian encouragement of excessive consumption, especially among lower income groups, as a way of preventing depressions. This is a culture, backed by tax policy, that virtually destroyed thrift in our country and encouraged private debt at the same time that government red ink was hitting record levels."
Inflation Is the Last Thing We Need, by Sheldon Richman, 31 Oct 2013
Responds to promoters of an inflationary environment by explaining the monetary and its effects
"A wage increase might make up some lost ground, but people on fixed incomes don’t get wage increases, so they're out of luck. Also, prices typically rise faster than wages during an inflationary period. The advocates of inflation say it will raise business profits. Aside from the fact that raising profits is not the government's job, does that really make sense? While businesses will be able to charge more for their goods during an inflation, they will also have to pay more for the things that they buy, including labor. Where's the real gain?"
Is there a federal deficit?, by Walter E. Williams, 19 Apr 2006
Discusses, from an economics standpoint, whether there is a budget deficit in the U.S. federal government and what are the effects of the shortfall between federal expenditures and revenue (taxes)
"Another way to force us to spend less privately is to inflate the currency. Theoretically, Congress can consume what we produce without enacting a single tax law; they could simply print money. The rising prices, which would curtail our real spending, would act as a tax. Of course, an important side effect of doing so would be economic havoc."
Related Topics: Government, Taxation
Liberalism, by Friedrich Hayek, New Studies in Philosophy, Politics, Economics and the History of Ideas, 1978
Chapter 9; originally written in 1973 for the Enciclopedia del Novicento; covers both the history of both strands of liberalism as well as a systematic description of the "classical" or "evolutionary" type
"But the endeavours to prolong the prosperity and to secure full employment by means of the expansion of money and credit, in the end created a world‑wide inflationary development to which employment so adjusted itself that inflation could not be discontinued without producing extensive unemployment. Yet a functioning market economy cannot be maintained under accelerating inflation, if for no other reason than because governments will soon feel constrained to combat the effects of inflation by the control of prices and wages."
Making Money Disappear, by Richard W. Rahn, The Washington Times, 22 Nov 2011
Defines money, discusses inflation and the gold standard and suggests that the problems will only go away if governments relinquish their monopolies on money issuance
"Inflation occurs when the central bank — the Fed in the United States or the European Central Bank in Europe — creates money at a faster rate than the supply of goods and services increases. ... If people hold on to money rather than spend it, inflation will fall and vice versa. ... even though the Fed has been rapidly increasing the money supply, much of it is sitting in banks rather than being used for additional investment or consumption. Even so, the growth in the money supply has been greater than the growth in new goods and services; hence the current inflation."
Related Topics: Gold Standard, Money, Zimbabwe
Minimum Wage Rates, by Ludwig von Mises, Human Action, 1949
Chapter 30, "Interference With the Structure of Prices", Section 3; discusses the setting of minimun wages both by legislation and by collecitve bargaining, pointing out some of the resulting problems
"But if the government finances its spending program by inflation--by an increase in the quantity of money and by credit expansion--it causes a general cash-induced rise in the prices of all commodities and services. If in the course of such an inflation the rise in wage rates sufficiently lags behind the rise in the prices of commodities, institutional unemployment may shrink or disappear altogether. But what makes it shrink or disappear is precisely the fact that such an outcome is tantamount to a drop in real wage rates."
Mont Pelerin: 1947-1978, The Road to Libertarianism, by Ralph Raico, Libertarian Review, Dec 1979
Reviews the presentations and discussions at the 1978 meeting of the Mont Pelerin Society, with an overview of the Society's history and particularly the 1958 meeting which had similar themes
"Jacques Rueff declared: 'There can be no liberal revival so long as inflation goes on. Inflation is a far greater threat to liberty throughout the world today than Marxism.' And Milton Friedman noted: 'A Third world war is the most obvious threat to the preservation of a free society. If this may be optimistically put to one side, the most serious threat is, I believe, inflation. Inflation is a threat less because of its direct effects than because of the measures that are likely to be taken by government to control the inflation and the effects of inflation on the competitive structure of the economy.'"
Professor Ludwig von Mises Discusses Free Enterprise, La Prensa, 2 Jun 1959
Translation of interview with Ludwig von Mises upon visiting Buenos Aires; discusses Mises' views on free enterprise, inflation, the policies of De Gaulle and Adenauer and the possibility of an Argentine economic recovery
"He later talked to us about the problem of inflation, saying that 'the most unfortunate factor in the current economic structure of western countries is the one constituted by the inflationary policies that in greater or less degree are practiced in all of them, including the United States.' ... When taxes are not enough, because taxable sources are exhausted, they embrace the policy of monetary emission without backing collateral, falling into spiraling inflation ..."
Speaking of Inflation, by Stu Pritchard, Future of Freedom, Jan 2006
Discusses the common misunderstanding of inflation as rising prices as opposed to the monetary phenomenon
"Commentators often mention rising costs nowadays paid first by retailers for their products and services, then by consumers. Apparently, they think that that is inflation. No, they’ve got the cart before the horse. ... For an excellent discussion of what inflation really is and the critical role that government plays in producing it, I’d recommend for everyone’s reading 'Inflation in One Page' and Economics in One Lesson, (especially its chapter 'The Mirage of Inflation'), both by Henry Hazlitt ..."
Related Topic: Milton Friedman
The Economic Costs of Going to War: Transcript: Bill Moyers Talks with Lew Rockwell, by Lew Rockwell, NOW with Bill Moyers, 7 Mar 2003
Topics discussed include: the economy, the federal budget deficit, the national debt, inflation, Republican vs. Democrat presidents, tax cuts, war spending, World War II and the depression, Sadam Hussein and unemployment
"Because, I mean, sometimes Republicans and the Democrats for that matter like to pretend that there's some way to fund the government other than the two ways of taxation and inflation. ... And when we have deficits this size first of all it means that everybody's worried that these are gonna be monetized. [Which means t]hat the federal reserve will in effect print money to pay them. And that has all kinds of bad effects besides rising prices."
The Federal War on Gold, Part 1, by Jacob Hornberger, Future of Freedom, Aug 2006
Discusses some of the provisos in the U.S. constitution regarding coinage and the issuance of paper money
"When prices of commodities, goods, and services start rising in response to the depreciating quality of the money, the average person is likely to blame those in the private sector, such as oil companies, speculators, and businessmen, for the woes. Being unaware of economic principles, people will even demand that federal officials impose price controls and excess-profits taxes on the evil offenders, a demand that the authorities are often willing to oblige. That’s why inflation has always been the best friend of big spenders in government."
The Federal War on Gold, Part 3, by Jacob Hornberger, Future of Freedom, Oct 2006
Describes Franklin Roosevelt's executive order confiscating gold and nullifying gold clauses in contracts, its constitutional ramifications and subsequent related history
"Let's say a corporation issued a 100-year bond for $20, promising to pay 3 percent interest. Any lender would ask himself the obvious question, 'Why wouldn't this bond be worthless in a hundred years because of inflation?' To ensure that that wouldn't happen, the note would contain a 'gold clause' which stipulated that the company had to repay the bond, both principal and interest, in the same standard of gold that existed at the issuance of the note."
The Iraq War Crash: Stock market takes a dive - along with the prospects for peace in the Middle East, by Justin Raimondo, 2 Mar 2007
Discusses a 9% drop in the Shanghai Stock Exchange on 27 Feb 2007, which also affected other markets, in the context of the Iraq War and potential conflict with Iran
"There are two ways to finance a war: one is by directly increasing taxes. This is never popular, either with the people or the politicians, and so the latter have hit upon a successful subterfuge: inflation. They simply set the government printing presses to running at high speed, sell more government securities overseas, and impose a 'hidden' tax – one that falls disproportionately on those least able to afford it. But then again, don't the downtrodden masses always suffer the most in wartime?"
The Life, Death, and Resurrection of an Economy, by Michael C. Monson, The Freeman, May 1993
Lengthy economic history of Argentina, from the time of the conquistadors to the early 1990's, highlighting the outstanding growth in the 19th and early 20th century and the economic nationalism and government interventions in the 20th century
"If the people wanted money, he [Perón] would print it. Money in circulation skyrocketed. ... As a result of printing money by the bushelful, inflation was accelerating. Rather than deal with its own profligacy, the government instituted a two-year wage freeze in 1952. ... With the economy grinding to a halt and public opposition mounting, the government was forced to lift the wage freeze in April 1954. Now the underlying inflation that the government had tried to hide through its wage freeze became obvious."
The Organization of Debt into Currency: On the Monetary Thought of Charles Holt Carroll, by Robert Blumen, Mises Daily, 27 Apr 2006
Review of the fractional reserve banking and monetary arguments made by Charles Holt Carroll, a 19th century Massachusetts merchant, in a collection of 36 essays re-published in 1964 in Organization of Debt into Currency and Other Papers
"A constant problem with the 'fictitious money' system is price inflation. Debt, organized into currency influences prices in the same way as would money proper. Rising prices are the result. ... Like Cantillon and Mises, Carroll saw that an increase in the supply of money occurs at a specific point in the financial system, and that the effect on prices moves over time as the money is spent by the original recipients, and then spent again by secondary recipients ..."
Related Topics: Banking, Gold Standard, Money, Prices
The Ultimate Tax Cut, by Jacob Hornberger, Future of Freedom, Dec 2007
Explains how tax cuts promised by political candidates are fraudulent, since the government expenditures still have to be paid somehow, either by taxation or monetary inflation
"The advantage of paying for government expenses through inflation, as compared to income taxation, should be obvious: Most people don't have any idea that this is the way that government is paying its bills. They think that inflation is some sort of mysterious monetary infection that just seems to strike nations randomly and unexpectedly."
Related Topics: Government, Taxation
Under the Shadow of Inflationomics, by Hans Sennholz, Mises Daily, 1 Jun 2006
"The most influential mastermind undoubtedly was John Maynard Keynes ... Cloaking his reasoning in the sophisticated language of mathematical economics, he swayed public opinion and most politicians with the urgent need for currency devaluation, inflation and credit expansion, unbalanced budgets, and deficit spending."
Will An Oil Price Fall Push Inflation Down?, by Frank Shostak, Mises Daily, 21 Sep 2006
"It is a myth that price inflation is somehow led around by the nose by major sectors such as energy and has nothing to do with the money stock. Further, it is not the case that consumers are but passive players in this drama, accepting whatever prices they are given."
Related Topic: Prices

Cartoons and Comic Strips

In Case of Emergency, by John Sherffius, 26 Nov 2008
Treasury Secretary Paulson and the Rules of Monopoly, by Jeff Danziger, 16 Dec 2007


Duck Tales Inflation Lesson, by Walt Disney Animation Television, DuckTales, 25 Feb 1990
Annotated version of the "Dough Ray Me" episode, demonstrating how monetary inflation affects prices
Why Not Print More Money?, by Antony Davies, 4 Apr 2012
Explains what the effects would be if the government were to print money and hand it out, why money was invented and what economics problems does it solve
"Printing more money doesn't make more goods and services appear. It simply spreads the value of the existing goods and services around a larger number of dollars. We call this inflation. The average price level is like the number of dollar bills divided by the number of goods and services. Ultimately, doubling the number of dollar bills simply doubles prices. If everyone has twice as much money but everything costs twice as much as it did before, people aren't better off. People aren't better off because our wealth comes not from money, but from the goods and services money buys."
Related Topic: Money