Austrian economists understand that the inherent cause of inflation stems from the over-expansion of money supply. Monopoly privileges for coins or banknotes reduce the menu of choices but do not inherently cause inflation because market participants can still evaluate and reject debased or inferior money. On the other hand, the enforced legal-tender laws enable large-scale inflation by forcing the acceptance of debased or fractional-reserve money substitutes.
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Understanding the Real Cause of Inflation …
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Austrian economists understand that the inherent cause of inflation stems from the over-expansion of money supply. Monopoly privileges for coins or banknotes reduce the menu of choices but do not inherently cause inflation because market participants can still evaluate and reject debased or inferior money. On the other hand, the enforced legal-tender laws enable large-scale inflation by forcing the acceptance of debased or fractional-reserve money substitutes.