PROPHETS of inflation have not been lacking in this country ever since the devaluation of the dollar and the inauguration of the government spending program in 1933. Perhaps in the now not distant future they will receive their meed of tardy, and melancholy, honor. Inflation does seem rather obviously in the offing. But the assertion that the storm will inevitably burst upon us is even yet not completely convincing. There is no doubt, however, that most energetic government measures will be necessary to forestall the danger. These will not be pleasant, either to Congress or the population at large. The vital question is whether or not we have the resolution to see them through. If not, we can count confidently on sufferings much greater than those involved in the heavy taxation urgently required if the danger is to be avoided.
Discussion of the prospect of inflation in the United States is not inappropriate in a review dealing with international relations. The eyes of economists and business men everywhere are on us because of the size of our gold holdings and because of the extent to which economic recovery is a factor in general world recovery. Indeed, under present conditions one can say more correctly that gold is attached to the dollar than that the dollar is attached to gold. The question, then, whether there will be inflation in the United States is of direct concern to all the nations of the world.
In discussing inflation we are encountered at the start with an unfortunate indefiniteness of meaning. If inflation is defined as any expansion of the circulating medium, either absolutely or in comparison with the volume of production and trade, it is already with us and is waxing daily. If, however, we take realized price increases as our sole criterion there is need for some discrimination. Unless we regard as a price inflation any rise in the price level above its momentary status, we are at a loss to give the term
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