The ppt is based on the lesson in Economics in one lesson by Henry Hazlitt .In this ppt fallacies regarding inflation has been discussed.

1. THE MIRAGE OF INFLATION
• Prepared by:
• Saurabh Mishra
• Cuhp19MBA94
• Submitted to:
• DR. indervir singh

2. INTRODUCTION
 Inflation is defined as a
sustained increase in price level
or fall in the value of money.
 When the level of currency of a
country exceeds the level of
production , inflation occurs.
INFLAT

3. Why and how an increase in the quantity of money raises prices?
 Increase in money supply will give people more money to spend.
 Things they could not buy will now be in their reach, as they have more
money to spend.
 In this process demand for goods increased.
 If demand is not met in time , it will leads to excess of demand.
 This excess demand will eventually leads to inflation.
 When the process have completed , nearly everybody will have a higher
income measured in terms of money.
 This doesn’t mean however, that everyone’s relative or absolute wealth and
income will remain the same as before.
 On the contrary the process of inflation is certain to affect the fortunes of
one group differently from those of another.
 The first group to receive the additional money will benefit the most . The
money income of group A ,for example , will have increased before the prices
have increased , so they will be able to buy almost a proportionate increase
in goods

4.  The money incomes of group B will advance later , when prices have
almost increased somewhat ; but group B will be better off in terms of
goods.
 Meanwhile however , the groups that have still had no advance
whatever in their money incomes will find themselves compelled to
pay higher prices for the things they buy , which means they will be
obliged to get alone on a lower standard of living than before.
 In other words , the gains of the first groups of producers to benefit
by higher prices or wages from the inflation are necessarily at the
expense of losses suffered ( as consumers ) by the last groups of
producers.

5. How to control the value of money under inflation?
 IT is impossible to control the value of money under inflation. You cannot
for example , say in advance that a 100% increase in the quantity of money
will mean a 50% fall in the value of monetary unit.
 The value of money , as we have seen , depends upon the subjective
valuations of the people who hold it. And those valuations do not depend
solely on the quantity of it that each person holds .
 They depend also on the quality of money.
 In wartime the value of a nation’s monetary unit , not on the gold standards ,
will rise on the foreign exchanges with victory and fall with defeat ,
regardless of changes in its quantity.
 All this explains why , hyperinflation have once set in , the value of monetary
unit drops at a faster rate than the quality of money either is or can be
increased .
 When this stage is reached , the disaster is nearly complete; and the scheme
is bankrupt.

6. The Advocates of Inflation
 The more sophisticated advocates of inflation , in brief , are disingenuous .
They talk of paper money , like the more naive inflationist , as if it were a
form of wealth that could be created at will on the printing press.
 They even talk of multiplier by which every dollar printed and spent by the
government becomes magically equivalent to several dollars added to the
wealth of the country.
 In brief they divert both the public attention and their own from the real
causes of any existing depression.
 For the real causes , most of the time , are maladjustments within the wage
cost – price structure : Maladjustment between the prices of raw materials
and prices of finished goods , or between the price of one wage and another.
 At some point these maladjustments have remove the incentives to produce ,
or made impossible for production to continue .

7. Not Until these maladjustments are corrected can full
production and employment be resumed.
True inflation may sometimes correct them ; but it is a
heady and dangerous method.
It make corrections not openly and honestly , but by the
use of illusion.

8. Conclusion
 Who among us doesn’t feel richer and prouder when it is told that our
national income has doubled ( in terms of dollars ) compared to pre
inflationary period? Even the clerk who used to get $75 a week and now gets
$120 thinks that he must be in someway better off , though it costs him twice
as much to live as it did when he was getting $75
 He is of course not blind to the rise in cost of living. But neither he is fully
aware of his real position as he would have been if the cost of living had not
changed and if money salary had reduced to give him the same reduced
purchasing power that now he has , in spite of his salary increase because of
higher prices.
 Inflation is a autosuggestion , the hypnotism , the anesthetic , that has dulled
the pain of operation for him . Inflation is opium of the people.

9. Thankyou