The Orange Path

Ask The Professor: Inflation

Steven Horwitz, Fraser Institute, August 29th 2008

Few terms in economics are more misused in common parlance than “inflation.”

Can Unions Cause Price Inflation?

Robert Murphy, Mises Institute, 1/10/2008

We can now return to the original issue: if union agitation leads to wage increases, will that cause prices in general to increase?

The quick answer is, "No, not if the demand for money remains the same." If unions succeed in wage hikes, and employers raise the prices they charge consumers to maintain their own profit margins, and the supply of money remains the same, then something else has to "give." Either the prices of goods and services in nonunion sectors have to fall and offset the union sector hikes, or people's cash balances need to fall, in terms of their purchasing power.

Milton Friedman Interview

First Measured Century, PBS
Link here

The Depression, I may say, which started in 1929 was rather mild from 1929 to 1930. And, indeed, in my opinion would have been over in 1931 at the latest had it not been that the Federal Reserve followed a policy which led to bank failures, widespread bank failures, and led to a reduction in the quantity of money.