Defining ‘Inflation’

Webster’s dictionary had defined “inflation” as “an increase in the amount of currency in circulation resulting in a relatively sharp and sudden fall in its value and a rise in prices.”

Today, it calls inflation “a continuing rise in the general price level usually attributed to an increase in the volume of money and credit relative to available goods and services.” That flip of inflation’s cause and effect misplaces the public’s resentment on business and laborers instead of the central bankers who expanded the money supply. As justification for the modern definition, the Federal Reserve and other central banks can point to prices sometimes erratically jumping and falling during times of a steady increase in money.

That divergence between the rate of price changes and the change in the money supply is entirely plausible under a simple illustration. Suppose a shopper believes prices will soon rise. That gives an individual reason enough to buy up those commodities sooner rather than later. On a market-wide scale, that increased demand causes consumption to increase and prices to adjust upward.

Even still, I can think of a more straightforward definition of “inflation”: theft.