This chapter defines inflation as an increase in the money supply beyond the increase that occurs or would have occurred in commodity money. It critiques inflation on account of its arbitrary redistributive effects, distortion of profit calculations, and capital misallocation. Austrian economists advocate against fiat money systems and favor instead commodity-backed currencies that generate long-term slow deflationary tendencies in prices. The Austrian Business Cycle Theory (ABCT) then explains how credit expansion artificially lowers interest rates, causing unsustainable booms followed by inevitable crises and recessions. Historical examples, including the Great Depression and subprime crisis, illustrate this theory.