A Handbook of Alternative Monetary Economics
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A Handbook of Alternative Monetary Economics

Edited by Philip Arestis and Malcolm Sawyer

This major Handbook consists of 29 contributions that explore the full range of exciting and interesting work on money and finance currently taking place within heterodox economics. There are many themes and facets of alternative monetary and financial economics but two major ones can be identified.
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Chapter 28: Money and Inflation

Mathías Vernengo


28 Money and inflation Matías Vernengo John Maynard Keynes once said that according to Lenin there is no surer way of overturning a society than to degrade its currency. Inflationary processes, it is clear, can be very disruptive in the short run, even if they do not cause revolutions. But they also have longlasting effects. Fernand Braudel believed that price revolutions represented the strongest secular pattern in modern history. In fact, over the past eight centuries, the world economy has experienced four major price revolutions whose inflationary forces ultimately transformed economic and social structures. These four price revolutions took place approximately in the late-medieval period, from 1180 to 1350, after the age of great discoveries in the sixteenth century, from 1470 to 1650, during the Industrial Revolution era, from 1730 to 1815, and during the twentieth century, from the 1890s to the 1980s (Hackett Fischer, 1996). Not only inflationary processes come in long waves of steady and low inflation, but also every so often bouts of high inflation and hyperinflation occur. In other words, there are several types of inflationary processes. However, high inflation and hyperinflation are relatively rare events associated with severe crises, wars and situations when the state apparatus collapses. Two analytical distinctions are useful to understand different explanations of inflationary processes of all types. First, and more importantly, theories can be seen as cost-push or demand-pull theories of inflation. The former theories...

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