The Free Market Center

The Free Market Center

Inflation—Deflation

Inflationary Surge - Shoe Production Decreases

(Money Supply Increases for a Period)

Shoe Production Decreases

Shoe Production Decreases -2.00%/Month
Wheat Production Fixed 0.00%/Month

Money Supply Increases
from month 20 through month 30

 2.00%/Month

In this case shoe production declines throughout. We have the same upward surge in money near the middle of the period.

Inflation-Deflation

Here the decline in production starts a trend of rising dollar prices. The surge of money artificially accelerates that rise.

Direct Exchange

Inflation-Deflation

The surge has no effect on direct exchange prices.

The surge in money makes shoe production appear to decline even more than it has.

Let's see what a downward surge in money does.

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& James B. Berger. All rights reserved.
To contact Jim Berger, e-mail:

© 2010—2020 The Free Market Center & James B. Berger. All rights reserved.
To contact Jim Berger, e-mail: