In 1963, Milton Friedman and Anna Schwartz wrote "Inflation is always and everywhere a monetary phenomenon." The thrust of this statement is that inflation is caused by unsound monetary arrangements – not by those who are raising prices or asking for higher wages, and not by oil speculators or by dealers in foreign exchange. This statement was made at a time when blame was being placed for inflation on groups in society.
This statement focuses attention on the monetary role in inflation. It suggests that to have sound currency arrangements and avoid inflation as well as deflation, a society has to have sound monetary arrangements. This is true...
Inflation is not only a monetary phenomenon. Inflation is a political phenomenon. What is more, inflation is intractable because it is a political phenomenon.
Inflation has gone on now in most countries for decades. It is moving into a new stage in the U.S., a more virulent stage. The U.S. government is running a deficit this year that is, as a percentage of its expenditures, about as large as several Balkan countries that experienced hyperinflation after World War I. The U.S. had large deficits during World War II, and that set off a substantial post-war inflation. Another such inflation is baked in the cake.
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My thoughts: Expect double digit inflation.
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