e ending of inflation promote full employment. 2. The stagflation condition mentioned above, combining unemployment with inflation, is also, partly, due to prices having raced ahead of the printing of paper money - in expectation of further inflation. The quantity of money available at any one time is then not sufficient to sell all labour and goods offered at these inflated prices. In this case, also, ending inflation would reduce these excess prices to the market level corresponding to the stabilized money circulation and to that extent the unemployment existing during inflation would be reduced and not increased. (On the distinction between falling and fallen prices see under 6.) 3. When the inflationary "spending' (See the comments on this in paper No. 1.) by governments of their coercive paper currencies - amounting to an indirect taxation of all money claims - is ended, and this fact has become common knowledge, then, under monetary freedom, spending by private people would increase at least to the same extent (in purchasing power) and would exert an at least corresponding demand for labour V provided only that there are no other interferences with the free market, either. 4. The existing wages and prices need not remain at the old levels for any length of time but can be adjusted immediately - or as fast as people want to - under freedom. (See below, under 5, on the gradualist approach.) To the extent that inflation has distorted wages and prices, especially when it has set them above the market level, as it often does, inflation does cause unemployment, while it persists, This unemployment would disappear with the restoration of the market through monetary freedom and free trade - free pricing leading to the sale of all available goods and services at market prices. Required is only that the sellers of labour and goods are satisfied with market prices, that it is possible to determine free market prices easily and to pay...
