Inflation disrupts this system. As Milton and Rose Friedman summarize the problem in chapter 1 of their book Free to Choose:
One of the major adverse effects of erratic inflation is the introduction of static, as it were, into the transmission of information through prices. If the price of wood goes up, for example, producers of wood cannot know whether that is because inflation is raising all prices or because wood is now in greater demand or lower supply relative to other products than it was before the price hike. The information that is important for the organization of production is primarily about relative prices – the price of one item compared with the price of another. High inflation, and particularly highly variable inflation, drowns that information in meaningless static. (pp. 17-18)
I would suggest that a similar problem is posed by what is called linguistic or semantic inflation. This occurs when the use of a word that once had a fairly narrow and precise meaning comes to be stretched well beyond that original application. The result is that the word conveys less information than it once did. One way this occurs is via the overuse of hyperbole. The author of the article just linked to gives as examples words like “awesome” and “incredible.” At one time, if an author used these terms to describe something, you could be confident that it was indeed highly unusual and impressive – a rare and extremely difficult achievement, a major catastrophe, or what have you. Now, of course, these terms have become utterly trivialized, applied to everything from some fast food someone enjoyed to a tweet one liked. At one time, calling something “awesome” or “incredible” conveyed significant information because these terms would be applied only to a small number of things or events. Today it conveys very little information because the words are applied so indiscriminately.
Now, the same thing is true of words like “racism” and “bigotry.” At one time, to call someone a “racist” implied that he was patently hostile to people of a certain race, and to call someone a “bigot” implied that he was closed-minded about certain groups of people or ideas. Accordingly, these terms conveyed significant information. If someone really was a racist, this would manifest itself in behaviors like badmouthing and avoiding people of races he disliked, favoring policies that discriminated against them, and so on. If someone really was a bigot, this would manifest itself in behaviors like being intolerant of those he disagreed with, refusing calmly to discuss or debate their ideas, and so on.
Today the use of these terms has been stretched far beyond these original applications. In part this is a result of hyperbole born of political partisanship. Labelling political opponents “racists” and “bigots” is a useful way to smear them and to stifle debate, just as hyping something as “awesome” or “incredible” is (or once was, anyway) a useful way to draw attention to it. But the stretching of these terms has also resulted from the influence of ideologies (such as Critical Race Theory) that claim to reveal novel forms of racism and bigotry of which earlier generations were unaware – forms that float entirely free of the intentions or overt behavior of individuals. The result is that even people who exhibit no behavior of the kind once thought paradigmatically racist and who harbor no negative attitudes about people of other races can still be labeled “racist” if, for example, they dissent from CRT or other woke analyses and policy recommendations.
In fact, the words have drifted so far from their original meanings that today it is precisely those who are most prone to fling around words like “racist” and “bigot” who are themselves most obviously guilty of racism and bigotry in the original, narrower and more informative senses of the terms. They will, for example, shrilly and bitterly denounce “whiteness, “white consciousness,” and the like as inherently malign, even as they claim to eschew negative characterizations of any racial group. They will refuse to engage the arguments of their opponents and try instead to shout them down and hound them out of the public square, even as they accuse those opponents of bigotry.
Partisan hyperbole and wokeness have thus introduced so much “static” (to borrow Friedman’s term) into linguistic usage that the terms no longer convey much information. They now usually tell us little more than that the speaker doesn’t like the people or ideas at which he is flinging these epithets. It is no surprise, then, that use of these terms is increasingly generating more eyeball-rolling and yawns than outrage or defensiveness. As with “awesome,” “incredible,” and the like, overuse inevitably decreases effectiveness. The indiscriminate use of “racism” and “bigotry” is like printing too much money – in the short term it produces a euphoric jolt, but in the long-term it is self-defeating.