Economics Dictionary of ArgumentsHome
| |||
|
| |||
| Inflation: In economics, inflation is defined as the sustained increase in the general price level for goods and services in an economy over a certain period of time, which leads to a decline in the purchasing power of money. It is usually measured by indices such as the consumer price index (CPI) or the producer price index (PPI)._____________Annotation: The above characterizations of concepts are neither definitions nor exhausting presentations of problems related to them. Instead, they are intended to give a short introduction to the contributions below. – Lexicon of Arguments. | |||
| Author | Concept | Summary/Quotes | Sources |
|---|---|---|---|
|
Henry Thornton on Inflation - Dictionary of Arguments
Rothbard II 176 Inflation/Henry Thornton/Rothbard: Henry Thornton did make some important contributions in the last two chapters of Paper Credit, particularly in the long-deferred paper money-as-cause of inflation sections that rested uneasily With the separate and contrary Rothbard II 177 earlier chapters. Most of the anti-bullionist writers applied Adam Smith's dictum that bank credit cannot inflate the currency if confined to short-term, self-liquidating, 'real bills'. The difference is that Smith had applied it only to a specie standard, whereas the anti-bullionists extended it to a fiat money system. Thornton replied that this criterion will not work, since an increased quantity ofbank notes will also indefinitely inflate the monetary value of the real bills. So that the Smith-anti-bullionist 'limit' is an indefinitely elastic one that will in practice only provide an open channel for bank credit inflation. Thornton further pointed out that the current usury law in Britain of 5 per cent will aggravate the problem. For the free market interest rate or profit rate will rise higher than that in wartime (or in any boom situation). Consequently, the artificial holding down of the bank Ioan rate below the profit rate will stimulate an excessive borrowing, artificially high levels of investment, and a continuing monetary and price inflation. Thus, holding the bank rate of interest below the profit rate stimulates an increase in the demand for borrowing, and the continuing increase in the supply of money allows that demand to be fulfilled. Austrian School: In setting forth the inflationary consequences of artificially Iowering the rate of interest on bank Ioans, Henry Thornton anticipated the later Austrian theory of the business cycle, set forth by Ludwig von Mises and F.A. von Hayek and in turn based on the analysis of the Swedish-Austrian economist Knut Wicksell at the end of the nineteenth century. Thornton also hinted at the Austrian analysis of 'forced saving', pointing out that if excessive issues ofpaper money raise prices of goods more rapidly than wage rates, there will be some increase of capital investment, but that this increase will be at the expense of the labouring classes, and will therefore 'be attended with a proportionate hardship and injustice'.(1) 1. Henry Thornton. 1802. An Enquiry into the Nature and Effects of the Paper Credit of Great Britain. London: J. Hatchard and Messrs. F. and C. Rivington. _____________Explanation of symbols: Roman numerals indicate the source, arabic numerals indicate the page number. The corresponding books are indicated on the right hand side. ((s)…): Comment by the sender of the contribution. Translations: Dictionary of Arguments The note [Concept/Author], [Author1]Vs[Author2] or [Author]Vs[term] resp. "problem:"/"solution:", "old:"/"new:" and "thesis:" is an addition from the Dictionary of Arguments. If a German edition is specified, the page numbers refer to this edition. |
Thornton I Henry Thornton An Enquiry into the Nature and Effects of the Paper Credit of Great Britain London 1802, 1939 Rothbard II Murray N. Rothbard Classical Economics. An Austrian Perspective on the History of Economic Thought. Cheltenham, UK: Edward Elgar Publishing. Cheltenham 1995 Rothbard III Murray N. Rothbard Man, Economy and State with Power and Market. Study Edition Auburn, Alabama 1962, 1970, 2009 Rothbard IV Murray N. Rothbard The Essential von Mises Auburn, Alabama 1988 Rothbard V Murray N. Rothbard Power and Market: Government and the Economy Kansas City 1977 |
||
Authors A B C D E F G H I J K L M N O P Q R S T U V W X Y Z
Concepts A B C D E F G H I J K L M N O P Q R S T U V W X Y Z
