<P> Rapid increases in quantity of the money or in the overall money supply (or debasement of the means of exchange) have occurred in many different societies throughout history, changing with different forms of money used . For instance, when gold was used as currency, the government could collect gold coins, melt them down, mix them with other metals such as silver, copper, or lead, and reissue them at the same nominal value . By diluting the gold with other metals, the government could issue more coins without also needing to increase the amount of gold used to make them . When the cost of each coin is lowered in this way, the government profits from an increase in seigniorage . This practice would increase the money supply but at the same time the relative value of each coin would be lowered . As the relative value of the coins becomes lower, consumers would need to give more coins in exchange for the same goods and services as before . These goods and services would experience a price increase as the value of each coin is reduced . </P> <P> Song Dynasty China introduced the practice of printing paper money to create fiat currency . During the Mongol Yuan Dynasty, the government spent a great deal of money fighting costly wars, and reacted by printing more money, leading to inflation . Fearing the inflation that plagued the Yuan dynasty, the Ming Dynasty initially rejected the use of paper money, and reverted to using copper coins . </P> <P> Historically, large infusions of gold or silver into an economy also led to inflation . From the second half of the 15th century to the first half of the 17th, Western Europe experienced a major inflationary cycle referred to as the "price revolution", with prices on average rising perhaps sixfold over 150 years . This was largely caused by the sudden influx of gold and silver from the New World into Habsburg Spain . The silver spread throughout a previously cash - starved Europe and caused widespread inflation . Demographic factors also contributed to upward pressure on prices, with European population growth after depopulation caused by the Black Death pandemic . </P> <P> By the nineteenth century, economists categorized three separate factors that cause a rise or fall in the price of goods: a change in the value or production costs of the good, a change in the price of money which then was usually a fluctuation in the commodity price of the metallic content in the currency, and currency depreciation resulting from an increased supply of currency relative to the quantity of redeemable metal backing the currency . Following the proliferation of private banknote currency printed during the American Civil War, the term "inflation" started to appear as a direct reference to the currency depreciation that occurred as the quantity of redeemable banknotes outstripped the quantity of metal available for their redemption . At that time, the term inflation referred to the devaluation of the currency, and not to a rise in the price of goods . </P>

The main economic influence that causes inflation is