>>"There was huge inflation during WWI, as the government sold war bonds." I'm not sure of what you are saying there, but it can be interpreted like war bonds

>>"There was huge inflation during WWI, as the government sold war bonds." I'm not sure of what you are saying there, but it can be interpreted like war bonds is the cause of inflation. It's exactly the opposite. At war, a government have to use all the available resources for the war effort. That will produce inflation, because the war spending is competing with the private spending for the same resources. A way to avoid it, is for the government to retire money from the private sector. A way to retire money from the private sector is to sell war bonds to the population. If you buy a war bond, basically what you are doing is promising that you will not spend your money until after the end of the war. Normally you will get some interest for your patriotic sacrifice. Also, for the gold standard fans out there, imagine what would happen if a government can not mobilize all the available resources of the country because it has not enough gold. That would be the most ridiculous way to loss a war.