# Inflation

In economics, inflation is a sustained increase in the general price level of goods and services in an economy over a period of time. When the general price level rises, each unit of currency buys fewer goods and services.
    CONTENT : A - F , G - L , M - R , S - Z , See also , External links

## Quotes

    Quotes are arranged alphabetically by author

### A - F

* If government will not instill discipline, markets will. The dollar will collapse into worthlessness.
** Patrick Barron, How Bad Is Currency Debasement of the Dollar? (And is there anything we can do about it?), Mises Institute, 2 April 2022
* The [pay] policy is principally designed to hold down wages rather than to check inflation. Inflation is being used as an excuse to destroy free trade union bargaining.
** Tony Benn Speech in the House of Commons (Hansard, 7 November 1973, Col. 1015).
* These steps will enhance our productivity — raising wages without raising prices. That won’t increase inflation. It will take the pressure off of inflation, give a boost to our workforce, which leads to lower prices in the years ahead. So, if your primary concern right now is inflation, you should be even more enthusiastic about this plan. And as we promote — as we promote fair competition in our economy through the executive order I mentioned, it will drive down prices even further.
** President Joe Biden Remarks by President Biden on the Economy, July 19, 2021
* High rates of inflation create a tax on capital that makes much corporate investment unwise — at least if measured by the criterion of a positive real investment return to owners. This “hurdle rate” — the return on equity that must be achieved by a corporation in order to produce any real return for its individual owners — has increased dramatically in recent years. The average tax-paying investor is now running up a down escalator whose pace has accelerated to the point where his upward progress is nil.
** Warren Buffett, Chairman's Letter - 1980. Berkshire Hathaway (February 27, 1981).
* The big, looming, monetary issue is "quantitative easing": that is, printing money. What happens is that the government borrows from the Bank of England, not from the markets. It expands the money supply to keep the economy going and also to counter deflation without simultaneously increasing government debt. The attractions are obvious, as are the dangers. The Robert Mugabe school of economics provides a salutary warning about uncontrolled monetary expansion in generating hyper-inflation. The road to Harare is not as long as we might hope. Monetary easing may prove to be necessary but will have to be managed with great skill and care: Too little easing and the crisis drags on – as in Japan. If there is too much, the authorities face the messy task of mopping-up liquidity by issuing bonds which add to the burden of borrowing or else we lurch back from deflation to inflation. So interest rates may soon become yesterday's story.
** Vince Cable "Confiscating savings from the poor is stupid and cruel". The Independent. 8 January 2009.
* Low inflation and government prudence may be harmful for economic development.
** Ha-Joon Chang Bad Samaritans: The Myth of Free Trade and the Secret History of Capitalism (2008) Prologue, p. xxv.
* Inflation is bad for growth—this has become one of the most widely accepted economic nostrums of our age. But see how you feel about it after digesting the following piece of information. During the 1960s and the 1970s, Brazil’s average inflation rate was 42% a year. Despite this, Brazil was one of the fastest growing economies in the world for those two decades—its per capita income grew at 4.5% a year during this period. In contrast, between 1996 and 2005, during which time Brazil embraced the neo-liberal orthodoxy, especially in relation to macroeconomic policy, its inflation rate averaged a much lower 7.1% a year. But during this period, per capita income in Brazil grew at only 1.3% a year. If you are not entirely persuaded by the Brazilian case—understandable, given that hyperinflation went side by side with low growth in the 1980s and the early 1990s—how about this? During its ‘miracle’ years, when its economy was growing at 7% a year in per capita terms, Korea had inflation rates close to 20%-17.4% in the 1960s and 19.8% in the 1970s. These were rates higher than those found in several Latin American countries … Are you still convinced that inflation is incompatible with economic success?
** Ha-Joon Chang Bad Samaritans: The Myth of Free Trade and the Secret History of Capitalism (2008) Ch. 7: Mission impossible?; Can financial prudence go too far?, There is inflation and there is inflation, p. 139-140.
* Taking a step back, does either political party have a better track record on inflation? The short answer is no, based on my analysis of economic data from 1953 to 2020. From Presidents Dwight D. Eisenhower through Donald Trump, inflation has averaged 3.35% under Democratic administrations and 3.5% under Republicans.
** William Chittenden, “Analysis: Why any party in power can’t do much about inflation”, PBS, (Nov 2, 2022)
* Another way to look at this is to examine the parties’ current or proposed policies. Democrats have touted their “Inflation Reduction Act,” a package of climate, health care and tax measures passed in August, as proof that they are tackling the problem. But despite the name, economists expect it to have very little impact on inflation anytime soon, because most of the measures will take years to go into effect. Republicans, meanwhile, have proposed cutting spending – such as on America’s social safety net – and lowering taxes for wealthier individuals and businesses. While spending cuts could reduce demand – and inflation – the lower taxes would work at cross purposes and drive up prices by pumping more money into the economy.
** William Chittenden, “Analysis: Why any party in power can’t do much about inflation”, PBS, (Nov 2, 2022)
* Supply chain concerns are growing beyond electronics and chips into most other commodities. Lead times are extending, shipping lanes are slowing, and we will not see an end to this in 2021
** CNBC "Key inflation gauge watched by the Federal Reserve hits another 30-year high" (October 1, 2021)
* The end of Greedflation must surely come. Otherwise, we may be looking at the end of capitalism. This is a big issue for policymakers that simply cannot be ignored any longer.
** Albert Edwards, a global strategist at Société Générale, "'We may be looking at the end of capitalism': One of the world's oldest and largest investment banks warns 'Greedflation' has gone too far". Fortune. April 5, 2023
* At its height, the hyperinflation seemed terrifying. Money lost its meaning almost completely. Printing presses were unable to keep up with the need to produce banknotes of ever more astronomical denominations, and municipalities began to print their own emergency money, using one side of the paper only. Employees collected their wages in shopping baskets and wheelbarrows, so numerous were the banknotes needed to make up their pay packets; and immediately rushed to the shops to buy supplies before the continuing plunge in the value of money put them out of reach.
** Richard J. Evans, The Coming of the Third Reich (2004), p. 105
* The consequences both of the hyperinflation and the way it came to an end were momentous. Yet its long-term effects on the economic situation of Germany's population are hard to measure. It used to be thought that it destroyed the economic prosperity of the middle-class. But the middle class was a very diverse group in economic and financial terms. Anyone who had invested money in war bonds or other loans to the state lost it, but anyone who had borrowed a large sum of money as a mortgage for a house or flat was likely to end up acquiring the property for virtually nothing. Often these two situations were united to one degree or another in the same person. But for those who depended on a fixed income, the results were ruinous. Creditors were embittered. The economic and social cohesion of the middle class was shattered, as winners and losers confronted one another across new social divides. The result was a growing fragmentation of the middle-class political parties in the second half of the 1920s, rendering them helpless in the face of demagogic assaults from the far right. And, crucially, as the deflationary effects of the stabilization began to bite, all social groups felt the pinch. Popular memory conflated the effects of the inflation, the hyperinflation and the stabilization into a single economic catastrophe in which virtually every group in German society was a loser.
** Richard J. Evans, The Coming of the Third Reich (2004), p. 109
* Inflation is elevated, largely reflecting factors that are expected to be transitory. Supply and demand imbalances related to the pandemic and the reopening of the economy have contributed to sizable price increases in some sectors
** Federal reserve statement "Fed to start tapering asset buys by $15 billion later this month" (November 3, 2021)
* Inflation is always and everywhere a monetary phenomenon in the sense that it is and can be produced only by a more rapid increase in the quantity of money than in output. … A steady rate of monetary growth at a moderate level can provide a framework under which a country can have little inflation and much growth. It will not produce perfect stability; it will not produce heaven on earth; but it can make an important contribution to a stable economic society.
** Milton Friedman The Counter-Revolution in Monetary Theory (1970).

### G - L

* Tax reduction has an almost irresitible appeal to the politician, and it is no doubt also gratifying to the citizen. It means more dollars in his pocket, dollars that he can spend if inflation doesn't consume them first. But dollars in his pocket won't buy him clean streets or an adequate police force or good schools or clear air and water. Handing money back to the private sector in tax cuts and starving the public sector is a formula for producing richer and richer consumers in filthier and filthier communities. If we stick to that formula we shall end up in affluent misery.
** John W. Gardner The Recovery of Confidence (1970), p. 152.
* Hyperinflation is not going to happen in this country, will never happen... The Fed putting so much money into the system is not going to create the risk of hyperinflation in the future. We have a strong independent Federal Reserve with a very strong mandate from the Congress, and they will do what's necessary to keep inflation low and stable over time.
** Timothy Geithner This Week with George Stephanopoulos, March 29, 2009
* We are obviously all hurt by inflation. Everybody is hurt by inflation. If you really wanted to examine who percentage-wise is hurt the most in their incomes, it is the Wall Street brokers. I mean their incomes have gone down the most.
** Alan Greenspan, at a conference on inflation, Washington, D.C. (September 19, 1974). In Report of the Health, Education, and Welfare, Income Security, Social Services Conference on Inflation (1974), pp. 804–5.
* Globalization was exerting a dis-inflationary impact.
** Alan Greenspan The Age of Turbulence (2008) Chapter Eleven, "The Nation Challenged", p. 228.
* The well-being of the British people and the health of our economy are far more important than any government's commitment to a particular strategy, but to change course now would be fatal to the whole counter-inflation strategy.
** Geoffrey Howe 1981 budget speech, as quoted in "Chancellor determined not to change course in the fight against inflation", The Times, 11 March 1981, p. 6.
* As taxpayers we gave one of Warren Buffet's companies, in 2006, an interest-free loan of $665 million dollars, and he only has to pay half of it back 28 years from now. ...Imagine ...you bought a house in 1980 at the price in 1980. Up until now [2009] you haven't made any payments on the house, and this year you have to pay half in the... dollars you agreed to back then, no adjustment for inflation. Do you think that alone might make you a wealthy man?
** David Cay Johnston; How The One Percent Enrich Themselves at Government Expense (Jun 23, 2009)
* As soon as interest is abolished, inflation becomes unnecessary...
** Margrit Kennedy (1995) Interest and Inflation Free Money Chapter Two, Creating an Interest and Inflation Free Money, p. 41.
* In the new money system we abolish interest and inflation, thereby reducing the prices of all goods and services as well as taxes by about 40%.
** Margrit Kennedy (1995) Interest and Inflation Free Money Chapter Three, Who Would Profit From a New Monetary System?, p. 66.
* Lenin is said to have declared that the best way to destroy the capitalist system was to debauch the currency. By a continuing process of inflation, governments can confiscate, secretly and unobserved, an important part of the wealth of their citizens. By this method they not only confiscate, but they confiscate arbitrarily; and, while the process impoverishes many, it actually enriches some. The sight of this arbitrary rearrangement of riches strikes not only at security, but at confidence in the equity of the existing distribution of wealth. Those to whom the system brings windfalls, beyond their deserts and even beyond their expectations or desires, become 'profiteers,' who are the object of the hatred of the bourgeoisie, whom the inflationism has impoverished, not less than of the proletariat. As the inflation proceeds and the real value of the currency fluctuates wildly from month to month, all permanent relations between debtors and creditors, which form the ultimate foundation of capitalism, become so utterly disordered as to be almost meaningless; and the process of wealth-getting degenerates into a gamble and a lottery. Lenin was certainly right. There is no subtler, no surer means of overturning the existing basis of society than to debauch the currency. The process engages all the hidden forces of economic law on the side of destruction, and does it in a manner which not one man in a million is able to diagnose.
** John Maynard Keynes The Economic Consequences of the Peace (1919) Chapter VI, pg.235-236.
* The acid test of monetary policy is its record in reducing inflation. Those who wish to join the debate about the intricacies of different measures of money and the implications they may have for the future are welcome to do so. But at the end of the day the position is clear and unambiguous. The inflation rate is judge and jury.
** Nigel Lawson Mansion House Speech (17 October, 1985).

### M - R

* Indeed, let us be frank about it. Most of our people have never had it so good.
** Harold Macmillan quoted in "More production 'the only answer' to inflation", The Times, 22 July 1957, p. 4; About speech at Bedford, 20 July 1957.
* Inflation is an increase in the quantity of money without a corresponding increase in the demand for money, i.e., for cash holdings.
** Ludwig von Mises The Free Market and Its Enemies, speech to the Foundation for Economic Education (1951).
* The value of currency had come down, because Sultan Sikandar had got idols of gold, silver and copper broken and turned into coins.
** Tabqat-i-Akhari, (also known as Tabqat-i-Akbar Shahi, Tabqat-i-Akbari, Tarikh-i-Nizami) by Khwajah Nizamud-Din Ahmad bin Muhammad Muqim al-Harbi, Translated from the Hindi version by S.A.A. Rizvi included in Uttar Taimur Kalina Bharata, Aligarh 1959, Vol. II. p. 515-17, In Goel, S.R. Hindu Temples - What happened to them
* In most Western economies, the general relationship is not in fact between the rate of inflation and the level of unemployment, but between the rate of change of inflation and the rate of change of unemployment.
** Paul Ormerod The Death of Economics (1994) Part II, Chapter 6, Unemployment and Inflation, p. 130.
* Once the true relationship between inflation and unemployment is understood, with luck and skill, a free lunch is possible.
** Paul Ormerod The Death of Economics Part II, Chapter 6, Unemployment and Inflation, p. 13.
* Of course, some responsibility for overstimulating lies with the Federal Reserve, which responded correctly to the onset of the pandemic by cutting interest rates and shoveling money into the financial system. More recently, the Fed has been too slow to curtail its program of buying debt, sending still more money to chase those few goods. And until recently, Fed officials were echoing the White House line about “transitory” inflation. For the Fed, addressing inflation will mean raising interest rates, perhaps sooner than it thinks necessary. The Fed targets average annual inflation of 2 percent. So if or when the pace of price increases gets stuck far above that level, the central bank will need to raise in-terest rates to address the problem. While the Fed thinks this won’t happen until late next year, the bond market believes rates will be hiked by midyear. The responsibility for easing inflationary pressures also lies with the Biden administration. To its credit, it is scrambling to address the supply shortages, doing things like unclogging ports. But other ideas, such as releasing oil from the Strategic Petroleum Reserve, amount to distracting symbolic moves that are unlikely to have a significant effect on inflation.
** Steven Rattner "I Warned the Democrats About Inflation", New York Times, (November 16, 2021)
* Mr. Carter had also promised that he would not use unemployment as a tool to fight against inflation. And yet, his 1980 economic message stated that we would reduce productivity and gross national product and increase unemployment in order to get a handle on inflation, because in January, at the beginning of the year, it was more than 18 percent. Since then, he has blamed to the people for inflation, OPEC, he's blamed the Federal Reserve System, he has blamed the lack of productivity of the American people, he has then accused the people of living too well and that we must share in scarcity, we must sacrifice and get used to doing with less. We don't have inflation because the people are living too well. We have inflation because the Government is living too well.
** Ronald Reagan, Presidential Debate in Cleveland; October 28, 1980
* A merchant trading with capital has been injured by the depreciation of money, as his capital has not been equal to the same extent of business as before the depreciation; but there are few merchants in this situation:—their capitals, as well as that of tradesmen, are invested in goods, ships, &c. they are rather debtors than creditors to the rest of the community... the prices of their commodities will undergo the same variations as the prices of all others, their comparative value will... be the same... The depreciation of the circulating medium has been more injurious to monied men... It may be laid down as a principle of universal application, that every man is injured or benefited by the variation of the value of the circulating medium in proportion as his property consists of money, or as the fixed demands on him in money exceed those fixed demands which he may have on others. Thus the farmer is injured by any increase in the value of money... whilst he has a fixed money rent, and fixed money taxes to pay. His produce... will sell for less, whilst his taxes and rent continue the same. ...He, more than any other class of the community, is benefited by the depreciation of money, and injured by the increase of its value.
** David Ricardo, Letter to the Editor, Morning Chronicle (Sep 6, 1810) as quoted in "Report of the Bullion Committee, The Works and Correspondence of David Ricardo (1962) Cambridge at the University Press for the Royal Economic Society, Vol. III, Pamphlets and Papers 1809-1811, p. 136.
* The real story in the inflation data was the upside in the more cyclical and persistent components like rent. That tells us that there’s an important source of support that is likely to keep the inflation data firm in the months ahead and potentially beyond
** Robert Rosener, senior U.S. economist at Morgan Stanley "Accelerating Inflation Spreads Through the Economy" (October 13, 2021)
* The natural tendency of the state is inflation.
** Murray Rothbard The Case for a 100 Percent Gold Dollar (1974).

### S - Z

* But while Republicans insist they will be better stewards of the economy, few economists on either end of the ideological spectrum expect the party’s proposals to meaningfully reduce inflation in the short term. Instead, many say some of what Republicans are proposing — including tax cuts for high earners and businesses — could actually make price pressures worse by pumping more money into the economy. “It is unlikely that any of the policies proposed by Republicans would meaningfully reduce inflation in 2023, when rapidly rising prices will still be a major problem for the economy and for consumers,” said Michael R. Strain, an economist at the conservative American Enterprise Institute.
** Jim Tankersley and Emily Cochrane, “Republicans Denounce Inflation, but Few Economists Expect Their Plans to Help”, New York Times, (Oct. 26, 2022)
* “The amount of cuts you’d have to do to move the needle on inflation are completely off the table,” said Jon Lieber, a former aide to Senator Mitch McConnell of Kentucky who is now the Eurasia Group’s managing director for the United States.
** Jim Tankersley and Emily Cochrane, “Republicans Denounce Inflation, but Few Economists Expect Their Plans to Help”, New York Times, (Oct. 26, 2022)
* Everyone in the world needs money – to get paid, to trade, to live. Paper money is an ancient technology and an inconvenient means of payment. You can run out of it. It wears out. It can get lost or stolen. In the twenty-first century, people need a form of money that's more convenient and secure, something that can be accessed from anywhere with a PDA or an Internet connection. Of course, what we're calling 'convenient' for American users will be revolutionary for the developing world. Many of these countries' governments play fast and loose with their currencies. They use inflation and sometimes wholesale currency devaluations, like we saw in Russia and several Southeast Asian countries last year [referring to the 1998 Russian and 1997 Asian financial crisis], to take wealth away from their citizens. Most of the ordinary people there never have an opportunity to open an offshore account or to get their hands on more than a few bills of a stable currency like U.S. dollars. Eventually PayPal will be able to change this. In the future, when we make our service available outside the U.S. and as Internet penetration continues to expand to all economic tiers of people, PayPal will give citizens worldwide more direct control over their currencies than they ever had before. It will be nearly impossible for corrupt governments to steal wealth from their people through their old means because if they try the people will switch to dollars or Pounds or Yen, in effect dumping the worthless local currency for something more secure.
** Peter Thiel, In a speech delivered at PayPal in 1999, as remembered by Eric M. Jackson in The PayPal Wars
* As in so much else, the French revolutionary regime (1789–94) was the precursor of the centralized, totalitarian, managerial, pseudo-democratic despotisms that now reign over the West. It is also reminder that mass democracy and inflation go together, as surely as thunder and lightning. Let us revisit the Revolution, from a free-market, hard-money perspective.
** Scott Trask, Inflation and the French Revolution: The Story of a Monetary Catastrophe, The Mises Institute, 23 November 2020
* Let's turn inflation over to the post office. That'll slow it down.
** Morris Udall Quoted in Richard Severo, "Morris K. Udall, Fiercely Liberal Congressman, Dies at 76," The New York Times (December 14, 1998).
* You know what's worse than high inflation and low unemployment? It's high inflation and a recession with millions of people out of work. I hope you'll reconsider that, before you drive this economy off a cliff.
** Elizabeth Warren, "Powell says recession 'a possibility' but not likely", NPR, (June 22, 2022)

## See also

* Interest