Austrian View
See also: Austrian School#InflationThe Austrian School maintains that inflation is always and everywhere simply an increase of the money supply (i.e. units of currency or means of exchange), which in turn leads to a higher nominal price level, as the real value of each monetary unit is eroded, loses purchasing power and thus buys fewer assets and goods and services.
Given that all major economies currently have a central bank supporting the private banking system, money can be supplied into these economies by means of bank-created credit (or debt). Austrian economists believe that this bank-created credit growth (which forms the bulk of the money supply) sets off and creates volatile business cycles (see Austrian Business Cycle Theory) and maintain that this "wave-like" or "boomerang" effect on economic activity is one of the most damaging effects of monetary inflation. However, the Austrian theory of the business cycle varies significantly from mainstream theories with economists such as Gordon Tullock, Bryan Caplan, and Nobel laureates Milton Friedman and Paul Krugman having said that they regard the theory as incorrect.
Read more about this topic: Monetary Inflation
Famous quotes containing the words austrian and/or view:
“The war shook down the Tsardom, an unspeakable abomination, and made an end of the new German Empire and the old Apostolic Austrian one. It ... gave votes and seats in Parliament to women.... But if society can be reformed only by the accidental results of horrible catastrophes ... what hope is there for mankind in them? The war was a horror and everybody is the worse for it.”
—George Bernard Shaw (1856–1950)
“‘Twas mercy brought me from my Pagan land,
Taught my benighted soul to understand
That there’s a God, that there’s a Saviour too:
Once I redemption neither sought nor knew.
Some view our sable race with scornful eye,
“Their color is a diabolic die.”
Remember, Christians, Negroes, black as Cain,
May be refin’d, and join th’ angelic train.”
—Phillis Wheatley (c. 1753–1784)