The conventional definition of inflation—as a sustained rise in the general price level, tracked through metrics like the Consumer Price Index—dominates economic discourse, reducing human behavior to statistical trends. Neoclassical and Keynesian models emphasize macroeconomic factors—money supply growth, demand shocks, or cost pressures—while largely ignoring the purposeful actions of individuals. Even Austrian economists, despite their praxeological commitment to human action, as articulated by Mises, often remain tethered to market-based terms like “price inflation” or “monetary expansion” when critiquing mainstream views. This focus—perhaps a byproduct of engaging with neoclassical arguments—risks diluting the insight that economic phenomena stem from intentional human choices.
Ludwig von Mises’s Human Action (1949) establishes economics as the study of purposeful behavior—individuals acting to achieve their subjective ends. Unlike aggregate models that prioritize statistical outcomes, like price indices, praxeology centers on the intentions behind choices. To reframe inflation, we must begin with this principle: what we call “inflation” is not merely a market phenomenon, but a manifestation of deliberate human actions, particularly those that alter the conditions under which individuals trade. This shift moves us away from impersonal metrics and toward the motivations driving economic interactions.
In a praxeological framework, markets function through voluntary exchanges where individuals pursue their goals based on subjective valuations. Prices emerge organically as signals of these preferences, facilitating coordination without coercion. What we label as “inflation” often reflects actions that distort this process—deliberate interventions that skew the terms of exchange.
Within a praxeological framework, money enables voluntary exchange by conveying subjective valuations, a function contingent on confidence in its stability. Deliberate manipulation—such as expanding the money supply—introduces distortions that undermine this confidence, though not instantaneously. Actors respond by recalibrating their expectations and behaviors, attempting to navigate the skewed terms of trade. Inflation reflects this deeper process of monetary interference, while aggregate metrics capture only its superficial manifestations—price changes and economic imbalances—obscuring the progressive erosion of confidence in money’s integrity, which, if unaddressed, risks culminating in its abandonment as a medium of exchange.
Monetary Actions as Artifice
Praxeology, as articulated by Mises, posits that economic phenomena stem from purposeful human action aimed at achieving subjective ends. Monetary manipulation exemplifies such action through deliberate interventions that distort money’s role as a medium of exchange. These include historical practices like coin clipping, where actors shaved precious metals to create additional currency, and counterfeiting, where individuals illicitly produce money to gain unearned purchasing power, as well as modern central authority policies, such as expanding the money supply to influence economic conditions. Each represents an intentional act to alter the terms of voluntary trade, undermining the spontaneous coordination of market exchanges and laying the groundwork for the distortions associated with inflation.
Voluntary exchange relies on money as a medium that conveys subjective valuations, enabling actors to coordinate their plans without coercion. Deliberate monetary manipulations—whether through coin clipping, counterfeiting, or central authority policies like money supply expansion—disrupt this process by altering money’s value in ways that are not mutually consented to by trading parties. These actions skew price signals, misrepresenting the relative scarcity and preferences that guide economic decisions. As a result, what appears as market activity reflects not the genuine intentions of participants but the imposed distortions of manipulators, eroding the foundation of spontaneous order central to Mises’s conception of the market.
The misalignment of economic coordination caused by monetary manipulations—such as coin clipping, counterfeiting, or central bank money supply expansion—stems from prices that no longer reflect the true preferences and scarcity conditions of voluntary exchange. As actors rely on these skewed signals to make decisions, they encounter outcomes—unanticipated losses, unequal gains, or resource misallocations—that betray their expectations of fair trade. This discrepancy fosters a growing distrust in the reliability of money as a medium of exchange, prompting individuals to question the validity of market interactions and adjust their behavior in ways that further destabilize the economic order, such as seeking alternative stores of value or reducing participation in trade.
Deliberate increases in the money supply by central authorities produces artificially-lowered interest rates, diverging from a structure of production that reflects genuine savings and investment preferences. These rates mislead actors about the availability of capital, enabling otherwise unviable businesses to persist longer than market conditions would sustain. This artificial prolongation distorts the temporal alignment of production and consumption, diverting resources toward projects that misalign with sustainable economic coordination and planting seeds for an inevitable correction when the divergence becomes untenable.
Societal Consequences of Monetary Interference
Deliberate monetary manipulations extend their impact beyond economic misallocations to erode the societal trust that underpins cooperative human action. As individuals experience the effects of inflation—rising prices, diminished purchasing power, or unearned wealth transfers via Cantillon effects—they begin to perceive economic interactions as increasingly unfair, fostering skepticism not only toward money’s reliability but also toward the institutions and social bonds that facilitate trade. This erosion of confidence prompts defensive behaviors—hoarding (saving), speculation, or withdrawal from market participation—that fragment communal cooperation, weakening the social fabric essential for sustained economic and interpersonal harmony.
Individuals navigating the effects of inflation often feel as though they are playing a game where every move results in loss—savings erode, costs climb, and gains seem perpetually out of reach—without recognizing the unseen forces tilting the odds. This relentless frustration—born from the experience of diminishing returns despite earnest effort—cultivates a societal impulse to rewrite the rules, fostering egalitarian ideals as a means to level the playing field. Unaware of how the game is rigged, people turn to notions of “fairness” and “shared outcomes,” seeking to reshape social arrangements to mitigate the persistent sense of defeat that permeates their daily lives.
The turn toward egalitarianism—sparked by the relentless sense of loss in an uneven game—reshapes societal perceptions of justice as individuals collectively aspire to a system where outcomes align more closely with effort rather than unseen advantages. This shift transcends mere frustration, evolving into a shared conviction that fairness demands a leveling of rewards and burdens, often expressed through calls for communal oversight or redistribution. As people grapple with the opaque forces eroding their stability, they redefine justice—not as individual merit but as a collective equilibrium—altering the moral landscape that governs their interactions and institutions.
Conclusion
Reframing inflation through Mises’s lens of purposeful human action reveals it as more than a statistical artifact or economic distortion—it emerges as a profound societal force, rooted in acts of duplicity that ripple beyond markets into the fabric of human life. From historical coin clipping to modern money supply expansions, these acts disrupt voluntary exchange, misalign coordination, and sow persistent losses that erode trust and cooperation, ultimately igniting egalitarian aspirations and a reimagined sense of justice. This analysis underscores that inflation’s true significance lies not in aggregate measures but in its capacity to reshape human perceptions, relationships, and moral frameworks, highlighting the primacy of intent and its consequences in economic and social evolution.
