The Century of Inflation
The Twentieth century may be remembered as the century of excess.
In every area,
more things were done in the Twentieth century than in any other century in history, and in many
cases, more than in all previous centuries combined.
The Twentieth century saw some of the
most destructive wars in history, the development of the Atomic Bomb, the beginning of air and
space travel, the colonization and decolonization of the Third World, the rise and fall of
Communism, dramatic improvements in the standard of living, the population explosion, the rise
of the computer, incredible advances in science and medicine, and hundreds of historically
The Twentieth century also produced more inflation than any other century in history.
Inflation is nothing new.
Roman rulers produced inflation in Third Century Rome by debasing
their coins, China suffered inflation in the fourteenth century when the Emperors replaced coins
with paper money, Europe and the rest of the world suffered inflation when gold and silver started
flowing into the Old World from the New World in the sixteenth century, and the French and
American Revolutions destroyed currencies in each of those countries.
Nevertheless, as we shall see, the Twentieth century produced the worst inflation in
Every single country in the world suffered worse inflation in the Twentieth century
than in any century in history.
So what caused this inflation to occur, and is further inflation in the
Twenty-first century inevitable?
The Nineteenth Century
Amazingly enough, the Nineteenth century was a period of deflation, rather than inflation.
From the end of the Napoleonic Wars in 1815 until the start of World War II in 1914, there was no
inflation in most countries, and in many cases, prices were lower in 1914 than they had been in
Prices fluctuated up and down from one decade to the next, but overall, prices remained
There were exceptions to this rule.
The United States suffered inflation during the Civil
War, though the United States also went through deflation after the war in order to bring the
economy back onto a gold standard.
The Confederate States suffered high inflation since they
printed money to pay for the war. The eventual collapse of the Confederate States made their
Countries were able to minimize the amount of inflation they suffered during the
Nineteenth century because currencies were tied to commodities (gold and silver) whose supply
increased at rates similar to the increase in output.
Price stability in gold and silver produced
price stability for the world.
The Nineteenth century was a period of bimetallism.
Countries chose to back their
currency with either gold or silver.
The United Kingdom was on the gold standard from the end of
the Napoleonic Wars until 1914.
Because the British economy grew faster than the supply of
gold, prices fell in Britain during that hundred-year period.
Other countries such as France, Russia, Austria, most of Asia, and other countries tied