But we must ask ourselves at this point of our inquiries whether it is not possible that there are other reasons which could be advanced in favor of the inflationary interpretation of history. It is certainly necessary to approach the issue from every possible avenue. Let us think of a world in which the quantity of money is rigid. At an early stage of history the inhabitants of this world have produced the whole quantity of the commodity employed for the monetary service which can possibly be produced. A further increase in the quantity of money is out of the question.
Fiduciary media are unknown.
The average businessman will answer this question in the affirmative. Living and acting in an environment in which a slow but continuous fall in the monetary unit's purchasing power is deemed normal, necessary, and beneficial, he simply cannot comprehend a different state of affairs. He associates the notions of rising prices and profits on the one hand and of falling prices and losses on the other. The fact that there are bear operations too and that great fortunes have been made by bears does not shake his dogmatism. Creative innovations, new investments, and the application of improved technological methods require the inducement brought about by the expectation of price rises.