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The Moral of the Story

Economic complexity and central bankers can both cause rising prices. So what?

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A candy bar that cost a nickel in 1950 today costs $1.25 or so, depending on where you buy it.  That, in a paper wrapper, is the price revolution of the twentieth century.  Why did it happen? The answer usually given is that the quantity of money increased – too much paper money chasing too few candy bars. A more satisfying explanation, casual though it may be, is to recognize that the global economy has grown considerably more complex since 1950, and the system of money, banking, and credit more  complex along with it.  The price of the candy bar