In a Free Economy, Prices Would be Going down, Not Up

Source: Ludwig von Mises Institute
by Chris Calton

“Whenever politicians and media outlets discuss inflation, they invariably use the Consumer Price Index (CPI) as their measure. The CPI is only one of several price indices on top of the various measures of the money supply that underlie aggregate price changes. Strictly speaking, the CPI does not measure inflation per se, but rather the consequences of monetary expansion on consumer products. … But if the concern is the effect of monetary expansion, why are we using proxy variables to measure this phenomenon? Proxies are useful when we don’t have accurate data on the variable we want to measure, compelling us to find an imperfect substitute that (we assume) tends to follow from the variable we can’t measure. But we have very accurate measures of the money supply, going back more than a century.” (11/06/21)