"The experience of one country after another has made the features of the process of inflation familiar, almost stereotyped, phenomena. Prices rise slowly at first, but with a gathering momentum; they rise generally, but most unevenly, wholesale prices outstripping retail, the prices of goods that enter into foreign trade rising most of all. There is a state of feverish activity, with little or no unemployment, with, for some time, even an appearance of general prosperity. But the appearance soon proves to be illusory. The feverish business activity is seen to be inefficient and most wasteful activity, with speculative cleverness at a premium, and solid work and enterprise at a discount. There is a fungoid growth of unnecessary intermediary operations, and a decline in genuine productive effort. The country's products are exchanged for the products of other countries on absurdly disadvantageous terms. A redistribution of wealth is effected, more revolutionary than the most revolutionary of Governments would deliberately enact, yet of a kind to increase rather than diminish the equalities of wealth."
"Just as feverish activity is the leading characteristic of inflation, so the leading characteristics of deflation are prolonged depression and malaise; and the medical parallel holds at least so far, that it is probably unavoidable that a fever of inflation should be succeeded by a period of subnormal business temperature."
From the "Yellow Book" (Britain's Industrial Future - the Report of the Liberal Industrial Inquiry of 1928). The emphases are mine.
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