Reply To: Inflation

#21455
johnwinters91
Participant

I’m having a hard time reconciling the statement that “the structure of prices will first be distorted and then restored.” with the statement that PPM goes down permanently.

I’m reading Rothbard’s Mystery of Banking, and in his chapter about the supply of money, he uses the Angel Gabriel example of the effects of a QE. He writes that after a monetary expansion where the angel doubles peoples’ checking account balances,

” as they rush to spend the money, all that happens is that demand curves for all goods and services rise. Society is no better off than before, since real resources, labor, capital, goods, natural resources, productivity, have not changed at all. And so prices will, overall, approximately double, and people will find that they are not really any better off than they were before. Their cash balances have doubled, but so have prices, and so their purchasing power remains the same.”

What am I missing?

Thank you