Recently and with little fanfare, Larry Kudlow, President Trump’s chief economic adviser, brushed against an unmitigated truth: “My hope is that the [Federal Reserve] under its new management understands that more people working and faster economic growth do not cause inflation.”

Kudlow got it right. The truth of the matter is that the word “inflation,” when used by economists in what might be called its “old-fashioned definition,” strictly refers to an expansion or inflation of the money supply, whether by way of the printing press, discovery of silver or gold, or (in a modern context) by deliberate Fed policy actions.

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