Inflation is a hot topic among economists, classical and Keynesian. But it has never happened at least since 1800 in a real sense. Price when expressed in currency we print has gone up, obviously as we print money faster than our total output can grow. This has proven to be a good policy rule to stabilize fluctuations that create unnecessary pain.
The priceless price we have paid for printing money faster is the inflation. Inflation defined as erosion of purchasing power of the dollar we print and assign some arbitrary number on it has been there. This is equivalent to saying that goods and services we buy have become expensive in dollar terms. Or we can say that purchasing power of a piece of dollar has fallen.
But wait!! Is dollar or any currency of our choice a good measure of value? Is there something which is less arbitrary than the number we print on a piece of a paper; sometimes 1 and sometimes 100. Yes, of course there is. If we have the same amount of those pieces of dollars, we would be able to purchase less and less with inflation.
Instead of using dollars, let us use an hour worth of work by a human being as a measure of value. Yes, a dollar buys 97% less than what it used to buy a hundred years back. But think about what an hour worth of work could buy a hundred years ago compared to what it can buy now. Can an hour of work buy less or more? Definitely more. Our per capita consumption has increased exponentially in real terms. The things we consume now did not exist back then. We did not have smartphones or the vaccines we have now. We did not have the air travel that we have now.
In this sense, things have become cheaper, a lot cheaper in hour of work terms. What an average global citizen can afford was not affordable to aristocrats and Kings 200 years back. The eight hour work, five days work and vacations are the inventions of early 20th century even in developed world.
Technology has made it possible for us to consume a lot more with the same amount of work. This is the age of technodeflation, not inflation.
The concern of classical economists regarding hyper-inflation deserves merit for it has been realized in many corners of the world here and there. Keynesians never worried about inflation. Technology and changing unit of measurement from dollars to an hour worth of work makes inflation disappear from the scene, at least in the long run.
I have talked about the issue in this podcast. The podcast is in Nepali.