Reply To: Inflation


Rothbard is referring to the purchasing power of a person’s entire money holdings. For example, at first he held $1,000 and the price of gasoline was $2.00 a gallon so the PP of of his $1,000 was 500 gallons of gasoline. After being visited by Gabriel, his money holdings were $2,000 and the price of gallon of gasoline was $4.00, so the PP of his entire money holdings was still 500 gallons.

What I was referring to as the PPM was the PP of a given amount of money, say a $1,000. After being visiting by Gabriel, the PP of a $1,000 has been cut in half. (500 gallons before his visit and 250 gallons after his visit.) This is the conventional way of referring to the PPM. It refers to the set of goods a given amount of money will buy.