Inflationary Quality Fallacy

There is a theory that the price inflation caused by seigniorage causes the production of lower "quality" and/or less durable goods. Durability is one of many qualities that a person might value in one good over another. The theory necessarily presumes that value is objective and therefore contradicts the subjective theory of value. As such the theory is invalid.

There is no provable relation between the number of units of money required to trade for a good and the qualities of a good that one might prefer. Greater wealth (which is perception, as value is subjective), implies lower time preference, as implied by the theory of marginal utility. However even under the assumption of a misperception of increasing wealth, lower time preference does not imply a preference for lower "quality" goods. It implies only an increasing willingness to lend a greater portion of one's capital.Rothbard makes this "subtle" error in "What Has Government Done to Our Money", one that continues to be perpetuated.

The quality of work will decline in an inflation for a more subtle reason: people become enamored of "get-rich-quick" schemes, seemingly within their grasp in an era of ever-rising prices, and often scorn sober effort.

Murray Rothbard: What has Government Done to Our Money

It is assumed, certainly by Rothbard, that people always prefer to get rich sooner than later, as implied by the axiom of time preference. And as shown by the Fisher Hypothesis, to the extent that price inflation is predictable it is offset in the real interest rate. To the extent it is not predictable Rothbard's conjecture does not apply.

Seigniorage is a tax, which makes people poorer. Being poorer increases time preference, the opposite effect described by the theory. All tax shifts property involuntarily from some people to other people, as that is its only actual mechanism and objective respectively. As Rothbard himself elaborates in his more rigorous "Man Economy and State", the form of the tax is economically irrelevant.

For all these reasons, the goal of uniformity of taxation is an impossible one. It is not simply difficult to achieve in practice; it is conceptually impossible and self-contradictory.

Murray Rothbard: Man Economy and State

Therefore it cannot be shown that seigniorage itself makes people poorer than the taxes it presumably replaces. Only a net increase in tax implies a reduction in wealth.