Nicholas Oresme and the First Monetary Treatise




Inflation Entails Exploitation and Tyranny

If inflation is wholly unnecessary, the question is of course: why is the nominal money supply being inflated after all? In our day, most people and even most economists have no clue. But in the 14th century, Oresme anticipated the Austrian answer: Inflation benefits those who create the inflation. It does not affect all money users at the same time, but at different points in time. It therefore creates winners and losers. Politically induced changes of the nominal money supply enrich the government at the expense of the citizenry. Oresme stressed that the government stood ready to gain from inflation; that the greed of governments was in fact the root cause of inflation; and that, once governments gave in to that temptation, they willy-nilly turned themselves into tyrants. In an immortal passage of the Treatise he wrote:

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