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Does inflation mean more than printing money?

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Dennis Brack/Dennis Brack/Newscom/File

(Read caption) Twenty dollar bills are printed at the Bureau of Printing and Engraving, Washington, DC. Does printing money have anything to do with inflation?

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Justin Lahart with the Wall Street Journal wrestles with the definition of ‘inflation’ in his article “Using a Dictionary to Define Inflation Can Spell Trouble.” Lahart writes that up until 2003, Webster’s defined inflation as printing money. Since the 2003 edition, Webster’s defines inflation as “a continuing rise in the general price level.”

Mainstream economists say that only those out-of-step define inflation as increased money creation. “They were quite far behind the times,” says Harvard economist Greg Mankiw. In his widely used economics textbook, he defines inflation simply as “an increase in the overall level of prices in the economy.”

Lahart traces the I-word back to 1755 when “The state of being swelled with wind; flatulence,” defined inflation.

In 1864, Webster’s American Dictionary of the English Language defined inflation as “undue expansion or increase, from over-issue; — said of currency.”

And so on from there until 2003.

“This semantic innovation is by no means harmless,” Mises wrote in Planning for Freedom. Mises points out that it’s impossible to fight an evil that you can’t name. The public gets lost when a detailed analysis is required and continually referring to this analysis is bothersome, besides being ineffective. “As you cannot name the policy increasing the quantity of the circulating medium, it goes on luxuriantly,” Mises wrote.

However, what is most damaging is that when policy makers fight the consequences of inflation–a rise in prices–they make matters worse, not realizing “the causal relation between the increase in money in circulation and credit expansion on the one hand and the rise in prices on another.”


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