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From an economics standpoint, inflation is an increase in the money supply. What we see in our everyday lives is sometimes called "price inflation", i.e. price

From an economics standpoint, inflation is an increase in the money supply. What we see in our everyday lives is sometimes called "price inflation", i.e. prices rising, and that can happen disproportionally. As a US-centric example, computer prices have been gradually decreasing, while healthcare and housing costs have skyrocketed. So an increase in the supply of money is separate from an increase in "a concentration" of money in a "market area" like healthcare, and productivity and material costs and whatever else factors into prices at any given time. Of course, an increase in the supply of money factors into prices where ever the money goes.

nabla9 8y ago
> From an economics standpoint, inflation is an increase in the money supply. This is not true unless you live in early 1900's or only surf some crackpot websites. In the language of economics inflation without specifics means price inflation. If you mean monetary inflation, you must use two words. Increasing money supply is not going to prices if 1) economy grows and demand for money matches the supply or 2) velocity of money decreases. https://fred.stlouisfed.org/series/M2V https://fred.stlouisfed.org/series/M2V As a thought experiment: If you mint a trillion dollar coin but are not using it, monetary supply increases radically but it has no effect on price inflation because it has zero velocity.
- _dps 8y ago
  I imagine you're referring to Austrian economics here, but much more mainstream economists believe inflation to be fundamentally about money supply as well. Here's (nobel prize winner) Milton Friedman, from Wikiquote: "Inflation is always and everywhere a monetary phenomenon in the sense that it is and can be produced only by a more rapid increase in the quantity of money than in output. … A steady rate of monetary growth at a moderate level can provide a framework under which a country can have little inflation and much growth. It will not produce perfect stability; it will not produce heaven on earth; but it can make an important contribution to a stable economic society." That's not so say that many don't hold the belief you have (i.e. that inflation should be understood primarily as price inflation, and monetary inflation is a secondary consideration). But it's not the only mainstream opinion.
  - alter_eco123 8y ago
    > I imagine you're referring to Austrian economics here Probably. It's strange how the only school of economic thought that actually corresponds to reality is the one shunned as "pseudoscience" or something. Go see for yourselves: http://mises.org http://mises.org
    - nabla9 8y ago
      Quoting Milton Friedman: >I think the Austrian business-cycle theory has done the world a great deal of harm. If you go back to the 1930s, which is a key point, here you had the Austrians sitting in London, Hayek and Lionel Robbins, and saying you just have to let the bottom drop out of the world. You’ve just got to let it cure itself. You can’t do anything about it. You will only make it worse. You have Rothbard saying it was a great mistake not to let the whole banking system collapse. I think by encouraging that kind of do-nothing policy both in Britain and in the United States, they did harm.
      - alter_eco123 8y ago
        And Milton was right about that just because he's Milton? Can you come up with an argument against Austrian Economics in your own words, or are you content trying to discredit it with an appeal to Milton's authority? I could argue against the quoted passage but I don't want to bother doing any more work than you have.
        xapata 8y ago
        You linked to some junk website as an appeal to authority. I'll throw you a bone: Deflationary policy is idiocy. Belief that monetary policy can be neither inflationary nor deflationary is anti-empirical and wishful thinking.
        alter_eco123 8y ago
        "Some junk website"? And yet, somehow I still think you're not even trolling! But if not.. Once again, I have to wonder what the hell is wrong with you people. By the way, that wasn't an appeal to authority. It was a link to a website where you can educate yourself, without having to take my word for anything. As for monetary policy, it shouldn't even be a thing.

nabla9 8y ago

> From an economics standpoint, inflation is an increase in the money supply. This is not true unless you live in early 1900's or only surf some crackpot websites. In the language of economics inflation without specifics means price inflation. If you mean monetary inflation, you must use two words. Increasing money supply is not going to prices if 1) economy grows and demand for money matches the supply or 2) velocity of money decreases. https://fred.stlouisfed.org/series/M2V https://fred.stlouisfed.org/series/M2V As a thought experiment: If you mint a trillion dollar coin but are not using it, monetary supply increases radically but it has no effect on price inflation because it has zero velocity.

_dps 8y ago
I imagine you're referring to Austrian economics here, but much more mainstream economists believe inflation to be fundamentally about money supply as well. Here's (nobel prize winner) Milton Friedman, from Wikiquote: "Inflation is always and everywhere a monetary phenomenon in the sense that it is and can be produced only by a more rapid increase in the quantity of money than in output. … A steady rate of monetary growth at a moderate level can provide a framework under which a country can have little inflation and much growth. It will not produce perfect stability; it will not produce heaven on earth; but it can make an important contribution to a stable economic society." That's not so say that many don't hold the belief you have (i.e. that inflation should be understood primarily as price inflation, and monetary inflation is a secondary consideration). But it's not the only mainstream opinion.
- alter_eco123 8y ago
  > I imagine you're referring to Austrian economics here Probably. It's strange how the only school of economic thought that actually corresponds to reality is the one shunned as "pseudoscience" or something. Go see for yourselves: http://mises.org http://mises.org
  - nabla9 8y ago
    Quoting Milton Friedman: >I think the Austrian business-cycle theory has done the world a great deal of harm. If you go back to the 1930s, which is a key point, here you had the Austrians sitting in London, Hayek and Lionel Robbins, and saying you just have to let the bottom drop out of the world. You’ve just got to let it cure itself. You can’t do anything about it. You will only make it worse. You have Rothbard saying it was a great mistake not to let the whole banking system collapse. I think by encouraging that kind of do-nothing policy both in Britain and in the United States, they did harm.
    - alter_eco123 8y ago
      And Milton was right about that just because he's Milton? Can you come up with an argument against Austrian Economics in your own words, or are you content trying to discredit it with an appeal to Milton's authority? I could argue against the quoted passage but I don't want to bother doing any more work than you have.
      - xapata 8y ago
        You linked to some junk website as an appeal to authority. I'll throw you a bone: Deflationary policy is idiocy. Belief that monetary policy can be neither inflationary nor deflationary is anti-empirical and wishful thinking.
        alter_eco123 8y ago
        "Some junk website"? And yet, somehow I still think you're not even trolling! But if not.. Once again, I have to wonder what the hell is wrong with you people. By the way, that wasn't an appeal to authority. It was a link to a website where you can educate yourself, without having to take my word for anything. As for monetary policy, it shouldn't even be a thing.