Inflation: The Cause of The French Revolution.



When the French economy underwent inflation in the years leading up to 1789, the general prices of goods increased dramatically while the value of money decreased. These poor economic conditions were related to demand-pull inflation and supply-shock inflation, which directly caused the French Revolution.


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Louis XIV spending on war.           Monarch's high spending on palaces (Versailles)


On the one hand, demand pull inflation occurred when “too much money chased too few goods.” The sharp rise in prices of goods was largely due to King Louis XIV’s bad monetary policies. He purposefully increased the money supply and printed too much money in order to solve France’s great financial problems. Instead of taxing members of the First and Second Estates, he tried to pay off huge debts from his extravagant expenses and great wars by rising taxes on the Third Estate and increasing bills in circulation. King Louis XIV came up with only one solution to his kingdom’s near bankruptcy: “unproductive debt expansion” led to great inflation that decreased purchasing power. This lessening value of money and increasing prices of goods greatly angered the bourgeois members of the Third Estate.

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Bad weather in France during the late 1780’s caused a inflation.

On the other hand, supply-shock inflation occurred after the sharp increase in the price of grain. The bad weather during the 1780’s was a total disaster. Peasants couldn’t farm because of the unpredictable weather and the crops were getting scare and not really available. Because of the grain shortage, not only the prices went up, but also the cost of living increased. Since the peasants and bourgeoisies couldn’t farm, they had to live in poverty, so they couldn’t pay taxes. Thus, the members of the Third Estate were starving and hopeless.
Together, the bourgeoisie and peasants of the Third Estate rose up to take control of the government and to ensure the equality of economic opportunity. Since they were treated poorly and were forced to pay so much high taxes, the bourgeoisie and peasants caused the French Revolution.


Citations
http://www.compulink.co.uk/~archaeology/civilisation/Later/french_revolution.htm
http://www.theglobalist.com/DBWeb/StoryId.aspx?StoryId=4250
http://www.aldridgeshs.qld.edu.au/sose/revrespg/french/aolnote1.htm
http://www.mises.org/story/1504
http://www.sjsu.edu/faculty/watkins/hyper.htm#FRANCE
http://www.bl.uk/collections/westeuropean/france.html