You hear a lot these days about inflation being dead. Strangely, such talk is most common in rich countries like ours with official inflation targets of two per cent a year. At two per cent a year, prices double in half a lifetime. In a century they increase seven-fold. Dead things don’t usually grow that relentlessly.
How do you solve the problem of too much money chasing too few goods? In principle, with either less money or more goods. In practice, however, way before you get inflation as high as a million per cent a year, your only real choice is the “less money” route, a lot less money, growing a lot more slowly, if at all. The reason is that with sky-high inflation, it’s very hard to coax extra goods out of your economy, even if that economy is operating with lots of slack.
Hume himself believed that in an economy that’s not hyper-inflating , monetary stimulus could very well increase real economic activity.