Books / Digital Text
The recent financial crisis of 2007–2008 generated a debate among economists over whether the leading central banks' unprecedented monetary intervention would spark a massive inflation and depreciation of currencies in the near future. During the meltdown of the banking system, central banks engaged in enormous monetary expansion and drastically increased member bank reserves in an effort to save the financial system and stimulate the economy. Despite this, inflation, at least judged by reported consumer price indexes, has grown at a relatively moderate rate in the period since the crisis. Why is this? Have we entered into a special period where monetary economics is no longer valid, and inflation is no longer a monetary phenomenon? Can central banks around the world now increase their respective money supplies ad libitum without suffering any consequences?
Answering these questions is partly one of the justifications for Peter Bernholz, renowned historian of inflation, to publish a second edition of Monetary Regimes and Inflation.