Prices don’t rise on their own. Money supply grows faster than what it can buy, and every unit already in someone’s hand quietly loses ground.
Inflation is the sustained fall in a currency’s purchasing power — not, as popular framing often implies, a weather pattern that “happens” to an economy, but the measurable output of specific monetary and fiscal choices. Milton Friedman’s summary of decades of monetarist research put it plainly: inflation is “always and everywhere a monetary phenomenon,” meaning sustained, generalized price rises track money-supply growth outpacing real output growth, not primarily the “cost-push” stories (oil shocks, wage demands) each generation blames first.
The practical effect is a hidden transfer: anyone holding cash or fixed-value savings loses real wealth every year prices rise faster than their savings do, with no explicit tax ever levied. A currency pegged to a physical asset (see gold peg) is one historical answer to this — not because gold has special properties, but because its supply can’t be expanded by policy decision the way a fiat money supply can.
Source: Friedman, M., “The Counter-Revolution in Monetary Theory,” IEA Occasional Paper 33, 1970 (origin of “always and everywhere a monetary phenomenon”); Schwarzer, J., “Retrospectives: Cost-Push and Demand-Pull Inflation: Milton Friedman and the ‘Cruel Dilemma,’” Journal of Economic Perspectives, 2018.