No, Inflation Is Most Certainly Not Rising Prices

In 1922 newly-married Lord Louis Mountbatten sold Heiglenberg, a German estate that had long been one of the holdings of the Battenbergs. For those wondering, the tragedy that was World War I resulted in the Anglicization of the names of much of the nobility in England, including the Battenbergs. Mountbatten was the result. But that’s a digression.

In the sale, Mountbatten settled on a specific amount in German marks. He erred mightily. As some no doubt know, a devaluation of the mark that began around the onset of WWI took on great speed in its aftermath. By the time the sale of Heiglenberg closed, one British pound exchanged for 520 marks. Since inflation eviscerated the value of his sale, it was fortunate for Mountbatten that his wife, Edwina, was rich.

A little over 100 years after Mountbatten’s sale, it remains a useful example of what inflation has long been, and what it decidedly isn’t. Inflation is a devaluation of the monetary unit, period. Nothing else. Readers will soon see why it’s nothing else, but for now, stop and consider what the devaluation of the mark meant for Mountbatten: it meant that the proceeds of the sale in marks hurtled toward worthlessness.

To be clear, inflation is the currency devaluation.

Read the entire article at Forbes


  • John Tamny

    John Tamny is a popular speaker and author in the U.S. and around the world. His speech topics include "Government Barriers to Economic Growth," "Why Washington and Wall Street are Better Off Living Apart," and more.

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