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Inflation: Plus Ça Change

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  • G. R. Steele

Abstract

The quantity theory of money is an enduring idea, which shows in many guises. At its heart is a truth. Government borrowing is the root of inflation and a source of market distortions. Although two centuries have passed since David Ricardo explained how state debt leads inevitably either to taxation or to currency debasement, that truth is little understood. All manner of scapegoats – rising import prices, ‘excessive’ wage demands, high interest rates – are usually nothing more than symptoms of excessive government borrowing.

Suggested Citation

  • G. R. Steele, 2008. "Inflation: Plus Ça Change," Economic Affairs, Wiley Blackwell, vol. 28(4), pages 77-79, December.
    • Handle: RePEc:bla:ecaffa:v:28:y:2008:i:4:p:77-79
    DOI: 10.1111/j.1468-0270.2008.00880.x
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    References listed on IDEAS

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    1. Barro, Robert J, 1974. "Are Government Bonds Net Wealth?," Journal of Political Economy, University of Chicago Press, vol. 82(6), pages 1095-1117, Nov.-Dec..
    2. Brunner, Karl & Meltzer, Allan H, 1972. "Money, Debt, and Economic Activity," Journal of Political Economy, University of Chicago Press, vol. 80(5), pages 951-977, Sept.-Oct.
    3. Ricardo, David, 1821. "On the Principles of Political Economy and Taxation," History of Economic Thought Books, McMaster University Archive for the History of Economic Thought, edition 3, number ricardo1821.
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