What is less generally known, however, is how large a role land speculation played in that hyperinflation. It seemed that one came at the expense of the other. Thus, employment surged until inflation started to heat up, then monetary brakes were applied, inflation slowed down, and unemployment started to rise. It became a truism that universal employment was not possible, in a modern market economy, without creating unacceptably high inflation. The power of governments to contain these bad economic effects seemed to have diminished, and we were forced to accept higher residual levels of unemployment.
Economists recognize two major types of inflation.
It' s easy to see that a combination of the two could result in stagflation. This is exactly what Henry George is describing, in his theory of booms and busts. In a growing economy, land rents increase faster than overall growth. This creates an incentive for more land speculation, further increasing land rents and prices. Thus we are led to suspect that if we could rid our economy of land speculation, we could erase the tendency for economic growth to lead to high inflation.