Inflation

Abstract

Inflation is a continuous rise in the price of goods and services in terms of the nominal money unit. Inflation cannot occur in a barter economy: it is purely a monetary phenonemon — a conclusion which monetary authorities may attempt to deny, when they fail in their responsibility to maintain a sound currency. Labour unions are the most common scapegoat; but in addition to cost-push by unions, inflation has been blamed upon sharp increases in the price of primary products, and upon cartel-inspired increases in the cost of oil. Yet, if labour-based, raw materials-based or energy-based commodity prices all rise continuously, it is more likely that they are the symptoms of a common cause.

If Keynes were alive, the theory might have been extended and strengthened, but that work has not been carried out by his successors. As a result, Keynesianism today — in practice, as an influence on policy — is inflationary in effect, and consistently inflationary. (Rees-Mogg, 1974, p. 27)