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You're right. Inflation actually refers to an increasing number of dollars in the economy, not increasing prices of goods. More dollars in the economy will le
by noelchurchill 16y ago
You're right.
Inflation actually refers to an increasing number of dollars in the economy, not increasing prices of goods. More dollars in the economy will lead to higher prices of goods and services, so this leads to the common misconception. But like you said, if government spending is larger without larger deficits, this would mean they're spending more existing dollars, no new dollars are created, and prices of goods stay the same.
- deleted 16y ago[deleted]
- lionhearted 16y agoWell, you're both right, or you're both wrong, depending on how you look at it. From your Wikipedia link: > The term "inflation" originally referred to increases in the amount of money in circulation. Today, the term monetary inflation is generally used to distinguish such an occurrence from a general rise in prices, sometimes called price inflation. "Price inflation" is the increase of prices. "Monetary inflation" is increases in the size of the money supply. Economists originally used to use the term "inflation" to mean monetary inflation (larger money supply), and if it's an economist not speaking to a popular audience, that's probably what he means. A larger money supply (monetary inflation) typically results in higher prices (price inflation).
- jakehow 16y agoGotta love the confidence. You are talking about price inflation, the parent is talking about currency inflation. Maybe you guys should stick to Merriam Webster's definition which masterfully butchers them into one: "a continuing rise in the general price level usually attributed to an increase in the volume of money and credit relative to available goods and services" http://www.merriam-webster.com/dictionary/inflation http://www.merriam-webster.com/dictionary/inflation