Economic Growth Doesn’t Cause Inflation. Here’s Why

Source: American Institute for Economic Research
by Alexander William Salter

“We have nothing to fear from supply-side disinflation or deflation. This is the benign effect of comparatively less money chasing comparatively more goods and services. A general slowdown in price hikes sends a valuable signal: Money goes further because the economy is more productive. The conventional wisdom is wrong because it neglects the supply side. If your theory of monetary policy begins and ends with aggregate demand, you’ll mistakenly think growth is inflationary. A realistic appraisal of the determinants of economic productivity shows that growth eases, not intensifies, pricing pressures.” (11/10/22)