The money supply can hardly shrink if govts continue to expand their expenditures, like Chalmers will do.
Henry Hazlett belongs to the Austrian School of Economics. They are very anti-Keynesian.
I've copied a few paragraphs from the intro to his book on inflation, (1978), as he points out the traditional meaning was simply an expansion in the money supply.
"No subject is so much discussed today—or so little understood—as inflation. The politicians in Washington talk of it as if it weresome horrible visitation from without, over which they had nocontrol—like a flood, a foreign invasion, or a plague. It is somethingthey are always promising to "fight"—if Congress or thepeople will only give them the "weapons" or "a strong law" todo the job.Yet the plain truth is that our political leaders have brought oninflation by their own monetary and fiscal policies. They are promisingto fight with their right hand the conditions brought on withtheir left.What they call inflation is, always and everywhere, primarilycaused by an increase in the supply of money and credit. In fact,inflation is the increase in the supply of money and credit. If youturn to the American College Dictionary, for example, you will findthe first definition of inflation given as follows: "Undue expansionor increase of the currency of a country, esp. by the issuing of papermoney not redeemable in specie" (emphasis added).In recent years, however, the term has come to be used in aradically different sense. This is recognized in the second definitiongiven by the American College Dictionary: "A substantial rise of prices11caused by an undue expansion in paper money or bank credit"(emphasis added). Now obviously a rise of prices caused by anexpansion of the money supply is not the same thing as the expansionof the money supply itself. A cause or condition is clearlynot identical with one of its consequences. The use of the wordinflation with these two quite different meanings leads to endlessconfusion.The word inflation originally applied solely to the quantity ofmoney. It meant that the volume of money was inflated, blown up,overextended. It is not mere pedantry to insist that the word shouldbe used only in its original meaning. To use it to mean "a rise inprices" is to deflect attention away from the real cause of inflationand the real cure for it.(However, I have to warn the reader that the word inflation isnow so commonly used to mean "a rise in prices" that it wouldbe difficult and time-consuming to keep avoiding or refuting it onevery occasion. The word has come to be, in fact, almost universallyused ambiguously—sometimes in sense one—an increase inmoney stock—but much more often in sense two—a rise in prices.I have personally found it almost hopelessly difficult to keep fromslipping into the same ambiguity. Perhaps the most acceptablecompromise, at this late stage, for those of us who keep the distinctionin mind, is to remember to use the full phrase price inflationwhen using the word solely in the second sense. "
