3 ms·

> Inflation is a measure of prices, not the money supply. It depends, when this word was coined, it simply meant increase in money supply. We can prove it by l

> Inflation is a measure of prices, not the money supply. It depends, when this word was coined, it simply meant increase in money supply. We can prove it by looking at the word for inflation in other languages, for instance in Hindi it is 'Mudrasfiti', which literally means 'increase in currency'. Increase in money supply leads to increase in prices ceteris paribus, so people tend to conflate the two concepts. OP is correct in saying that 'Bitcoin is inflationary and will remain so until 2140'. Whether the prices in bitcoin rise because of that is independent of the fact whether bitcoin is inflationary.

JumpCrisscross 8y ago
> when this word was coined, it simply meant increase in money supply "Inflation was initially used to describe a change in the proportion of currency in circulation relative to the amount of precious metal that constituted a nation’s money" [1]. It was less a synonym for increased money supply than for debasement. From the 1930s, however, "the Keynesian revolution in economics...separated the word inflation from a condition of money and redefined it as a description of prices." Now "the term has become nearly synonymous with 'price increase'." Economists have no view on money supply per se. They do, however, have a view on price deflation. It is bad. Bitcoin, if treated as a currency, is price deflationary. As such, it inherits the junk that come with price deflation, namely hoarding in favor of real activity. > We can prove it by looking at the word for inflation in other languages, for instance in Hindi it is 'Mudrasfiti', which literally means 'increase in currency' This is not a proof... [1] https://www.clevelandfed.org/newsroom-and-events/publications/economic-commentary/economic-commentary-archives/1997-economic-commentaries/ec-19971015-on-the-origin-and-evolution-of-the-word-inflation.aspx https://www.clevelandfed.org/newsroom-and-events/publication...

JumpCrisscross 8y ago

> when this word was coined, it simply meant increase in money supply "Inflation was initially used to describe a change in the proportion of currency in circulation relative to the amount of precious metal that constituted a nation’s money" [1]. It was less a synonym for increased money supply than for debasement. From the 1930s, however, "the Keynesian revolution in economics...separated the word inflation from a condition of money and redefined it as a description of prices." Now "the term has become nearly synonymous with 'price increase'." Economists have no view on money supply per se. They do, however, have a view on price deflation. It is bad. Bitcoin, if treated as a currency, is price deflationary. As such, it inherits the junk that come with price deflation, namely hoarding in favor of real activity. > We can prove it by looking at the word for inflation in other languages, for instance in Hindi it is 'Mudrasfiti', which literally means 'increase in currency' This is not a proof... [1] https://www.clevelandfed.org/newsroom-and-events/publications/economic-commentary/economic-commentary-archives/1997-economic-commentaries/ec-19971015-on-the-origin-and-evolution-of-the-word-inflation.aspx https://www.clevelandfed.org/newsroom-and-events/publication...