Lanterna Rally

Author: Thomas Robert Saving

Publisher:

Published: 1984

Total Pages: 36

ISBN-13:

This booklet, one of a series intended to apply economic principles to major social and political issues of the day, focuses on the relationship between growth of the money supply, growth of productivity, and inflation. Provided first is a definition of inflation along with discussions of price indexes, the value of money, and the concept of money-velocity in relation to inflation. As causes of inflation, the energy crisis and monopolies are briefly examined and rejected. Equations are developed to consider what determines price level, what determines the rate of inflation, and how things like oil and regulation affect inflation, and the conclusion is reached that growth of the money supply beyond the growth of productivity is the root cause of inflation. The section dealing with the cure for inflation covers: (1) the relationship between money and unemployment; (2) the relationship between an increasing rate of inflation and the reduction of unemployment; and (3) some problems with the solution to inflation, (defined as a reduction in the money supply and possibly a return to money that is convertible into a commodity, such as gold). (IS)