AGD - Chaper VI: Theory and Inflation - Economists and the Lure of a Stable Price Level

A long time stable level of prices led to the misconception, that inflation was not existent. The argument of the author is, that widespread, increased productivity in the 1920s off-set the inflationary effects of monetary policy for a long time. Ironically, the movement to ‘stabilize the purchasing power of money’ gained ground when prices actually did fall – by the 1920s. Legislative initiatives pressed for the FED being obliged to stabilize price levels by monetary policy, even seconded by international pressure.