Economists of various stripes have argued that inflation is the inevitable result of (pick your favorite) the abandonment of metallic monetary standards, a lack of fiscal discipline, shocks to the price of oil and other commodities, struggles over the distribution of income, excessive money creation, self-confirming inflation expectations, an “inflation bias” in the policies of central banks, and still others.
Then again, unlike today, most of that period was constrained by “gold convertibility.” If a gold miner introduces his product into the economy it thereby increases the money supply (assuming gold is accepted as money) but is it fair to call that inflation? Gold’s limited quantity is one reason it’s been accepted as money.
(emphasis mine) He suggests that the cause of inflation is subjective, a matter of opinion (“pick your favorite”), but whatever it is, it’s “apparently inexorable.” How did the economy somehow avoid a significant rise in prices during the period Greenspan mentioned—1800-1929? Nothing inexorable there, other than long-term price stability.
.the [money] supply had been “rising at a pretty good clip,” and there was no evidence the nation was “suffering grievously from a shortage of money.” What happens when someone on a bender stops cold turkey? By late 1980, the pain had arrived, as the federal funds rate hit 20 percent and the mortgage rate 18.45 percent but only for people with good credit.
Yet Bernanke—scoring a near-perfect SAT score during his high school days in Dillon, South Carolina, earning a PhD in economics from MIT, awarded Time Magazine’s Person of the Year in 2009, and winning the Nobel Memorial Prize in Economic Sciences in 2022 for his work on the Great Depression—mustered this comment about inflation: Since World War II, inflation—the apparently inexorable rise in the prices of goods and services—has been the bane of central bankers.
In the US, Fed chairman Paul Volcker, appointed by President Carter in 1979 to put a brake on inflation that would peak at 11.6 percent the following year, took a cold-blooded approach and simply stopped printing money rather than directly raising interest rates.
More revealing still was what he said before the passage above: Although the gold standard could hardly be portrayed as having produced a period of price tranquility, it was the case that the price level in 1929 was not much different, on net, from what it had been in 1800.
https://mises.org/mises-wire/finding-shelter-monetary-racketeers
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