By the way, macroeconomics is not restricted to monetarists. There are Austrian macroeconomists as there are microeconomists. The difference between monetarists and Austrians is that the latter generally hold into consideration both aspects of the topic. Here, though, Hazlitt is responding to individuals who have a specific idea of inflation in mind. It would be nonsensical for Hazlitt to approach the topic with a different definition of the problem being tackled.

Do you understand even the most elementary logic?

Idiotic!

“Expansion of the money supply is both the necessary and the sufficient cause of inflation.”

This statement simply not true with Hazlitt’s usage! And in Austrian usage, it’s just a vacuous truism.

Look, I agree with the Austrian perspective (I hate inflationism), but this is a monetarist line that goes too far. As a matter of fact, the two ideas don’t even have to contradict.

And so the supply of goods apparently has nothing to do with prices? If someone blows up an oil pipeline in Nigeria, that will make oil prices rise. What prices necessarily fall?

At the firm level, cost-push increases in prices makes perfect sense. The differences over the meaning of inflation have the arguments passing each other like ships in the night. The existence of a different argument is not a refutation of the argument. As far as the meaning of the general price level, I don’t think the idea is sensible at all, but neither is the objection.

No, it isn’t — to paraphrase Mr. Catalan, health care prices can continue to rise, but absent expansion of the money supply, prices in other sectors must drop. Of course, it’s been a month of Sundays since we’ve been absent an expanion of the money supply.