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Tuesday, October 30, 2012

What You Should Know About Inflation

In order to begin a discussion of the topic, it is necessary to first define what the term inflation actually means. The correct definition is an increase in a nation’s supply of money and credit. In more recent times it has become informal practice to refer to inflation as a general rise in prices. Hazlitt, however, points out that the two meanings are not equivalent, and the failure to grasp this distinction inevitably leads to confusing cause with effect. Inflation, in its proper definition, is almost always the result of government’s monetary and fiscal policies.

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