Why Do We Call It Inflation?
Boyle’s Law has something to do with it.
President Biden calls it Putin’s inflation. Federal Reserve Board chair Jerome Powell says the problem began with the pandemic. Harvard University economist Lawrence Summers blames the Fed. Who’s right? Some 250 years of interplay between the science of pneumatics and its technological applications were the background against which economist Irving Fisher, in 1928, expanded the modern usage of the term “inflation” to mean something more than rising prices. Fisher is not a bad place to begin to look for an answer..
Arguments about whether or not such a thing as a vacuums can exist, quicksilver (meaning mercury), barometers, j-tubes, pumps, valves, cylinders, plungers, hot air balloons, footballs, incandescent light bulbs, the discovery of inert gases (starting with helium), pressure cookers, inflatable tires – these topics or objects became familiar before Fisher took advantage of relationship between pressure, volume, and temperature of gases, itself by then vaguely understood, in order to attach a new meaning to an old word.
“Anyone… reading [The Money Illusion] (Adelphi, 1928) by Fisher, or other books on monetary affairs published in this period, may have some difficulty with terminology” wrote Fisher’s biographer, Robert Loring Allen, many years after the fact. “For more than a generation, the words ‘inflation’ or ‘deflation’ [had] usually meant increasing or decreasing prices.” But in The Money Illusion. Allen wrote, Fisher coined new meanings: “the words inflation and deflation refer to the money supply, not to prices. Money inflates and in consequence prices rise and a deflation in the money supply causes falling prices.”