Chapter 1: Ten Principles of Economics- Principle 9: Prices Rise When the Government Prints Too Much
The principle of economics, prices rise when the government prints too much money, is probably the largest economic principle applied to world history. By definition, inflation is when prices in an economy rise. Contrary to popular belief, inflation is good at a low level. Inflation is caused when the government prints too much money, like the principle says. Inflation can be seen throughout history.
In the early 1920's, a newspaper in Germany cost about 0.30 marks, and less than 24 months later, a newspaper in Germany cost 70,000,000 marks. Within Germany in those two years, all prices for goods and services rose in a drastic manner. Likewise, in the 1970s, prices in the United States doubled. Similarly, prices rose near 2010 when the nation's central bank printed money to increase the supply of money, in an attempt to reduce unemployment. Thus, all three examples of inflation throughout history demonstrate the effects of inflation, and the most recent example of the United States and its central bank illuminates the principle of economics in a real world sense.