Calvin Coolidge “Inflation is Repudiation”

Calvin Coolidge the 30th President of the United States, he is well-known as a promoter of Libertarian ideals as he favored lower taxes and small government. Though, he was part of the inflationary low-discount rate policy under the Harding and Coolidge administration. When he said “inflation is repudiation” he meant the government repudiates their debt. By increasing inflation, the government increases the price level and reduces the value of its outstanding debt. Only mattering if inflation is unexpected, where inflation is expected, people demand a higher nominal interest rate. Repudiation still occurs as the real value of the debt still falls when the price level rises. Though, not at the cost of holders of debt, since they are compensated with higher nominal interest rates. The inflation tax is paid by anyone who holds money, such as savers, it most likely affects those who are not close to the financial system.


Cochran, J. (2013). Coolidge and 1920s prosperity: some cautions. Mises Institute: United States. Retrieved [23/03/16] from <https://mises.org/blog/coolidge-and-1920s-prosperity-some-cautions>.

Rothbard, M. (2010). The economics of calvin and calvinism. Mises Institute: United States. Retrieved [23/03/16] from <https://mises.org/library/economics-calvin-and-calvinism>. 

Cochran, J. (2013). President coolidge and the laffer curve. Mises Institute: United States. Retrieved [23/03/16] from <https://mises.org/library/president-coolidge-and-laffer-curve>.

Featured image supplied from Unsplash.

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