Milton Friedman - Understanding Inflation

“History Doesn’t Repeat Itself, but It Often Rhymes” – Mark Twain


“Inflation is, everywhere and always, a monetary phenomenon.”
                        — Milton Friedman, Money Mischief

Frain. John C. “Inflation and Money Growth: Evidence from a Multi- Country Data-Set,” Economic and Social Review 35:3, [2004], 251–266


An interesting (if simplified) analysis by the heirs to Milton:


Thank you for sharing the Cochrane blog post - really interesting useful info. One chart literally drove home how much nuttiness was caused by the pandemic response. This makes the George W. Bush administration look amazingly responsible.

This chart is also a great visual to use with my kids on why you want to pay your credit card bill in full each month…


In the days of yore, inflation was defined as an increase in the supply of money relative to the supply of goods. It is a comparatively new idea to give “inflation” the meaning of rising prices rather than of an expansion in the money supply. A consequence of this linguistic sleight of hand is confusion about the necessary link between the two concepts.

Mises sums it up nicely in his essay “Inflation: An Unworkable Fiscal Policy” (via

“Inflation, as this term was always used everywhere and especially in this country, means increasing the quantity of money and bank notes in circulation and the quantity of bank deposits subject to check. But people today use the term `inflation’ to refer to the phenomenon that is an inevitable consequence of inflation, that is the tendency of all prices and wage rates to rise. The result of this deplorable confusion is that there is no term left to signify the cause of this rise in prices and wages. There is no longer any word available to signify the phenomenon that has been, up to now, called inflation. . . . As you cannot talk about something that has no name, you cannot fight it. Those who pretend to fight inflation are in fact only fighting what is the inevitable consequence of inflation, rising prices. Their ventures are doomed to failure because they do not attack the root of the evil. They try to keep prices low while firmly committed to a policy of increasing the quantity of money that must necessarily make them soar. As long as this terminological confusion is not entirely wiped out, there cannot be any question of stopping inflation.”