Page:Stabilizing the dollar, Fisher, 1920.djvu/104

50 in general. The price of butter at the corner grocery is lifted on this tide without our being able to observe the connection of the rise with inflation, just as a fisherman's boat is lifted by the tides of the sea without his being able to connect the rise with the action of the moon.

To answer categorically, therefore, the question, How does inflation raise the price of butter at the corner grocer's, we may say: (1) partly because his customers have more money to spend, and (2) chiefly because the prices he pays to the wholesaler have been raised; and the wholesaler's prices have been raised for the same two reasons, i.e. (1) partly because his customers have more money (and purchasing power generally) to spend, and (2) chiefly because the prices he has to pay have been raised; and so on indefinitely. In this explanation at each stage the chief factor is the second—the rise of some other prices. But as we proceed to trace it back through other stages this second, apparently chief, factor is, at each stage, resolved partly into the first—the abundance of money. What is not thus resolved at the early stages of this tracing back becomes so in the end. When, therefore, all stages are considered, the second factor melts away, and the first factor which at any one stage was the lesser turns out to be "the whole thing."

In the literature on the high cost of living we sometimes find partial glimpses of the series of readjustments above described. Some newspapers have said that higher wages, by increasing costs, require higher prices of the goods produced and that, in turn, high prices in the form of the high cost of living require high wages, and so on in "a vicious circle." Others have called