Representative Paul is here reciting the “Austrian” theory of the Great Depression. It says that even though there was no inflation during the 1920s, somehow or other inflation nevertheless caused the Great Depression. According to the Bureau of Labor Statistics, prices were either flat or falling throughout the 1920s - i.e., deflation. But the Austrian school believes there was actually some sort of double-secret inflation because the money supply increased. They believe the same thing is happening right now.
Bruce Bartlett explaining Austrian views and how they get basic facts wrong.