During the "boom" stage of inflation, investment is more highly concentrated (as compared with the free market) in those stages of production that are furthest removed from the final consumer's product. More generally, the inflation has disproportionate effects on precisely those goods that we previously saw were most sensitive to interest-rate fluctuations, driving up their market values and increasing expenditures on those items. The inflationary intervention particularly stimulates investment in highly capitalized industries whose assets include valuable durable goods (cf. pp. 4.8:20-2); electric utilities, for instance, are encouraged to overinvest in long-term plants. Because market values of land-sites and houses increase rapidly as interest rates drop (pp. 4.8:23-4), escalating real-estate prices are a commonly observed characteristic in the early stages following an act of inflation.

As the new money created by the inflation circulates through the economy, increasing the stock of money available to market participants, the marginal utility of money on their subjective value scales naturally diminishes. Because prices of other goods are determined in part by the marginal utility of money on the value scales of both buyers and sellers (p. 4.6:34), prices of virtually all goods and services (except money) rise, unless this effect is counteracted by other forces, such as simultaneous improvements in productivity resulting from technological advances. Even in the latter case, prices are pushed higher than they would be otherwise. For the same reason, the value of the currency in exchanges against foreign currencies diminishes, unless the latter are subject to concurrent inflationary policies.