Over the years in which I have been writing the weekly "Business Tides" column for Newsweek, I have received frequent inquiries from readers asking where they could obtain a brief and simple exposition of the causes and cure of inflation. Others have asked for advice concerning what course they could follow personally to prevent further erosion in the purchasing power of their savings. This book is designed to answer these needs.
Most of the material in it has appeared in my ~Newsweek articles during recent years; but all of the statistics and references have been brought up to date, and new material has been added to complete and round out the exposition.
The book has been deliberately kept short. But readers who are not interested in some of the collateral problems, but wish only a brief over-all view, may find what they are looking for either in the first six chapters or in the final chapter, "The ABC of Inflation," which attempts to summarize what is most important in the preceding discussion.
There are some repetitions in the book, but I offer no apology for them. When, as in this subject, basic causes are persistently ignored and basic principles persistently forgotten, it is necessary that they be patiently reiterated until they are at last understood and acted upon.
“One of the most stubborn fallacies about inflation is the assumption that it is caused, not by an increase in the quantity of money, but by a "shortage of goods." It is true that a rise in prices (which, as we have seen, should not be identified with inflation) can be caused either by an increase in the quantity of money or by a shortage of goods—or partly by both. Wheat, for example, may rise in price either because there is an increase in the supply of money or a failure of the wheat crop. But we seldom find, even in conditions of total war, a general rise of prices caused by a general shortage of goods. Yet so stubborn is the fallacy that inflation is caused by a "shortage of goods," that even in the Germany of 1923, after prices had soared hundreds of billions of times, high officials and millions of Germans were blaming the whole thing on a general "shortage of goods"—at the very moment when foreigners were coming in and buying German goods with gold or their own currencies at prices lower than those of equivalent goods at home.”
Henry Stuart Hazlitt (November 28, 1894 – July 9, 1993) was a libertarian philosopher, an economist, and a journalist for various publications including The Wall Street Journal and The New York Times, and Newsweek. He was the founding vice-president of the Foundation for Economic Education and an early editor of The Freeman magazine, an important libertarian publication. In 1946 Hazlitt wrote Economics in One Lesson, his seminal text on free market economics, which Ayn Rand referred to as doing a "...magnificent job of theoretical exposition." Hazlitt is credited with bringing his ideas and those of the so-called Austrian School to the American economics scene and his work has influenced the likes of economist Ludwig von Mises, novelist and essayist Ayn Rand, and 2008 Libertarian Party Presidential nominee and congressman, Ron Paul.
Hazlitt was a prolific writer, authoring 25 works in his lifetime.
Ludwig von Mises said at a dinner honoring Hazlitt: "In this age of the great struggle in favor of freedom and the social system in which men can live as free men, you are our leader. You have indefatigably fought against the step-by-step advance of the powers anxious to destroy everything that human civilization has created over a long period of centuries... You are the economic conscience of our country and of our nation."