Economic Growth and the Value of Money
6 June 2007
Editor, The Wall Street Journal
200 Liberty Street
New York, NY 10281
To the Editor:
Your report "Years of Global Growth Raise Inflation Worries" (June 6) is confused and confusing. It's incorrect to say that "global growth is fueling inflation rather than restraining it." Inflation - as the old saw goes - is caused by too much money chasing too few goods. Because economic growth creates more goods, such growth moves the price level downward. If economies are growing and also experiencing inflation, you can be darn sure that central banks are pumping out money too fast.
Sincerely,
Donald J. Boudreaux
Chairman, Department of Economics
George Mason University
Editor, The Wall Street Journal
200 Liberty Street
New York, NY 10281
To the Editor:
Your report "Years of Global Growth Raise Inflation Worries" (June 6) is confused and confusing. It's incorrect to say that "global growth is fueling inflation rather than restraining it." Inflation - as the old saw goes - is caused by too much money chasing too few goods. Because economic growth creates more goods, such growth moves the price level downward. If economies are growing and also experiencing inflation, you can be darn sure that central banks are pumping out money too fast.
Sincerely,
Donald J. Boudreaux
Chairman, Department of Economics
George Mason University
Posted by Don Boudreaux on
Saturday January 26, 2008 at 6:18pm