Conservative Economists Define Inflation as Currency Shrinkage

Forbes contributor John Tamny stated that inflation once meant evidence of currency shrinkage but has been redefined by economists as too much economic growth. Tamny wrote that the redefinition implies acceptance of the Keynesian view that government spending accelerates economic growth.

He referenced former President Biden's 2021 stimulus spending of nearly $2 trillion as an example cited by economist Larry Summers.

U.S. states. He said these events preceded later price increases. Tamny described the position of the Wall Street Journal editorial page under Robert Bartley and George Melloan as aligned with Say's Law, which holds that all consumption is preceded by production and that governments produce nothing.

Tamny stated that a recent Wall Street Journal editorial attributed the inflation spike to Federal Reserve policy choices under Jerome Powell, including accommodation of federal spending and low interest rates for too long. He said the analysis combined Keynesian multiplier theory with Phillips Curve thinking.

Tamny pointed out that the WSJ Dollar Index showed no notable decline from 2020 to 2022. He asked what conservatives mean by inflation given the absence of currency depreciation against foreign currencies or gold. "What fractures globalized production naturally results in higher prices just as what integrates global production naturally results in lower prices.