The 1520-1640 “Great Inflation”: An Early Case of Controversy on the Nature of Money

Abstract:

The causes of the “great inflation” of the sixteenth century have long been the subject of controversy. Since some major work in the 1930s, historians have argued over a “monetary” and a “real” interpretation. What we show in this paper is, first, that there was a dissenting opinion even then; second, that recent scholarship shows that the dissenters’ view of events was probably the more accurate as to fact; third, that the monetary interpretation of the day drew intellectual support from aflawed source; andfinally, that the dissenters were mounting the earliest argument for the endogenous origins of money.

Key Words::

• endogenous and exogenous money
• inflation
• population growth
• precious metals