Carola Binders Shock Values: Prices and Inflation in American Democracy offers a comprehensive overview of the history of inflation in the United States. Tracing out the major developments from colonial times through the post-pandemic surge in inflation in 202122, Binder provides a panoramic in-depth analysis of nearly three centuries of U.S. price fluctuations. Published in 2024, her book is particularly timely for anyone wishing to place the recent inflationary episode in its proper historical context. Binders careful narrative is an invaluable read for scholars, wishing to draw parallels with earlier eras in U.S. history.

Binder covers the major price fluctuations in U.S. history. She discusses the high inflations during the American Revolutionary War and the Civil War, the deflations of the 1870s and 1890s, the inflation surges during WWI and WWII, the deflation of the Great Depression, and the rising inflation of the 1970s, as well as many other episodes. She offers a rich account of the forces at work in each episode, and describes the key groups that suffered the most from these recurrent bouts of price instability.

Across these many historical eras, Binder focuses on the response of policymakers. Political leaders, concerned over the negative consequences of price fluctuations, as well as the anger of the voting public, advocated a host of measures. These policy prescriptions had a tendency to recur through history: price controls, particularly ceilings (to keep prices from rising), tariffs (to protect key interest groups from falling prices), and monetary reforms (which depended on the particular historical circumstances of the day). She discusses debates over price controls in the 1770s (during the American Revolutionary War), 1870s (over the Granger laws), 1910s (during WWI), 1940s (during WWII), 1950s (during the Korean War), and 1970s (during the Great Inflation). She describes fights over protectionism that led to higher tariffs (i.e., the Tariff Acts of 1816, 1824, 1828, and 1832, the McKinley Tariff of 1890, the Fordney-McCumber Tariff of 1922, and the Smoot-Hawley Tariff of 1930), as well as backlash to rising prices that led to tariff reductions. She dissects the debates over major monetary reforms and measures (continentals during the American Revolution and greenbacks during the Civil War, the existence and role of the First and Second Bank of the United States, bimetallism and the gold standard, the structure and mandate of the Federal Reserve).

Throughout the book, Binder describes the political implications of price instability in the context of the policy responses. For example, Binder recounts how tariffs influenced the 1824 and 1828 presidential elections. Later towards the end of the nineteenth century, fights over tariffs again took center stage in the 1880s and 1890s: the promise of higher tariffs helped Benjamin Harrison defeat incumbent President Grover Cleveland in the 1888 presidential election, but the backlash to higher prices and the promise to reduce tariffs helped Cleveland retake the White House in 1892. These episodes are particularly relevant today, given the resurfacing of debates over tariffs in U.S. politics. Binders descriptions of these episodes, as well as many others, offer a clear account of the ways in which the electorate responded to inflation and prices over time.

Binder also carefully analyzes the legal debates over the constitutionality of the measures adopted by policymakers. She chronicles the evolution of legal rulings, including over price controls, a national bank, the issuance of legal tender, the New Deal, and the Federal Reserve. Such a careful assessment of constitutional issues is often missing in economic accounts, but is essential for anyone wishing to gain a thorough grasp on the evolution of economic policy debates over U.S. history.

If I had to collapse the many important themes of Binders book into one main take- away message, I would select a key phrase: inflation matters. In much the same way that money matters serves as the unifying theme in Milton Friedman and Anna Schwartzs A Monetary History of the U.S, inflation matters emerges in Binders book as the recurrent theme, time and again, across U.S. history. Inflation has economic consequences, as key groups lose. Inflation prompts a host of policy responses, as political leaders and monetary officials seek to stabilize prices. Inflation has political consequences, as incumbents tend to receive the blame. Binder makes it clear, in one vivid example after another, that to understand economic and political history, one must have a solid understanding of the role of prices and inflation.

Binder has produced an excellent, engaging book. Narrating the key developments and policy debates about price fluctuations in every distinct era of U.S. history is no easy feat, but Binder has done so exceptionally well. An outstanding work, Shock Values: Prices and Inflation in American Democracy, is a must-read for anyone (scholars, students, the general public) wishing to better understand the economic and political consequences of inflation, past and present.