Of course, using inflation to refer to money supply increase would shed light on the parasitic practice of currency debasement. A pleasing idea, but not one government would like…

Best regards,
Álvaro Coronel

I side with Mises on the definition of “inflation:” A simple example—If the amount of money in circulation remains constant, and a company raises it’s prices,it basically means to me that if I buy the now more expensive product I will have less money remaining to buy anything else. In other words the increase in price(s) of selected products does not necessarily mean there will be a general price increase for all products.It just places limits on choices.

However if the money supply is artifically increased there will (over time) be a general price increase. This is because there is more money available to buy the same amount of products or services (which have not increased).

In a stable market economy prices are a fair reflection of the total cost to bring the product to market plus a profit percentage. I cannot constuct a senario where when the prices increase daily under hyper inflation this represents anything other than the printing of more money.

So I conclude if there has been a general price increase there has already been an increase in money supply.

Jon Nichols

I fully accept Mises point that price increases do not occur everyplace at the same time. Consequently, as he explains, there are winners and losers. On page 16 he explains his use of the term inflation: \"Inflation, meaning an increase in the quantity of money.\" This is not the definition that I learned acquiring degrees in economics, or from subsequent readings. The full sentence is revealing: \"Inflation, meaning an increase in the quantity of money, can, must, bring about higher wages and higher prices.\" I was taught that inflation was the change in the general price level. In his view this is the effect, not the cause.

The existence of two, very different, definitions of inflation is a source of perpetual confusion. It is easy enough to say we can sort this out. It\’s like the distinction between classical and modern \"liberal.\" In each case, it is \"easy to sort out,\" until you have a discussion with someone who uses the terms differently. Then the discussion often degrades into a pointless and intractable debate about semantics.

Mises also criticizes the notion of a price \"level.\" He says it is a metaphor for water levels that are uniform in elevation. He explains that prices do not rise uniformly; there is nothing level about prices. He makes many good points.

On page 13 he identifies three cases. Each is easy enough to understand. We may have heard the first two stories in own lives. I hope we will never experience the third story in the sense of hyper inflation.

I read this as a progressive realization that prices are going up and that the value of the currency is going down. First one thinks that price increases are temporary and will subside. Then one thinks that prices will keep going up, so one should accelerate one\’s existing spending plans. Finally, one spends on anything just to get something for the money, while one still can. It\’s a powerful story, and powerful history.

However, whenever he uses the term \"inflation\" in this section, I am unable to follow his reasoning. For example, how does phase I \"make the process of inflation easier?\"

I don\’t see how anyone with a standard training in economics can avoid learning something when reading Mises and pondering his words. True thinkers often like to visit and revisit fundamentals. Thank you for making this material available to scholars and laymen alike.