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CHAPTER 22The Mirage of Inflation1Ihave found it necessary to warn the reader from time to time thata certain result would necessarily follow from a certain policy “providedthere is no inflation.” In the chapters on public works and oncredit I said that a study of the complications introduced by inflationwould have to be deferred. But money and monetary policy form sointimate and sometimes so inextricable a part of every economicprocess that this separation, even for expository purposes, was verydifficult; and in the chapters on the effect of various government orunion wage policies on employment, profits, and production, some ofthe effects of differing monetary policies had to be considered immediately.Before we consider what the consequences of inflation are in specificcases, we should consider what its consequences are in general. Evenprior to that, it seems desirable to ask why inflation has been constantlyresorted to, why it has had an immemorial popular appeal, and why itssiren music has tempted one nation after another down the path to economicdisaster.The most obvious and yet the oldest and most stubborn error onwhich the appeal of inflation rests is that of confusing “money” with145