INFLATION: "Under such a system, the increase in the quantity of money is limited only by the self-restraint of government officials."

"A system of fiat paper money, that is, a system in which the monetary unit is a mere piece of paper stamped as such by government officials—a system in which pieces of paper are not a claim to anything beyond themselves and thus themselves possess ultimate debt-paying power—such a system virtually guarantees that prices will rise. Under such a system, the increase in the quantity of money is limited only by the self-restraint of government officials. As will be shown, these officials have great incentives to increase the quantity of money and are under constant pressure to increase it. Hence, the quantity of money increases at a rate sufficient to increase aggregate demand more rapidly than aggregate supply, with the result that prices rise."

~ George Reisman, from page 506 of his book Capitalism: A Treatise on Economics. Read it online here, or buy it here (currently at half-price!)

SEE ALSO:

• INFLATION: A Critique of the "Profit-Push" Explanation
• INFLATION: A Critique of the "Crisis-Push" Doctrine
• INFLATION: The Elimination of "Less Supply" as a the Cause of an Inflationary Rise in Prices
• INFLATION: A Critique of the "Cost-Push" Explanation in General