3 ms·
To HN: Is there a body of economic theory or a good text that separates inflation of the base currency from some other term that captures its relative value to
by benlorenzetti 8y ago
To HN: Is there a body of economic theory or a good text that separates inflation of the base currency from some other term that captures its relative value to other currencies?
- thaumasiotes 8y agoCurrency inflation measures the value of currency relative to... everything. Inflation is a fall in the value of currency. Why do you want a special term for e.g. the dollar falling by 8% at the same time that the british pound also falls by 8% (in which case the value of one currency relative to the other doesn't change)?
- grenoire 8y agoNot entirely a direct relationship but often heavily related is the international Fisher effect (https://en.wikipedia.org/wiki/International_Fisher_effect https://en.wikipedia.org/wiki/International_Fisher_effect).
- T-A 8y agoBig topic with plenty of proposed answers, none of which works particularly well. There is a summary of common ones here: http://www.economicsdiscussion.net/foreign-exchange/theories-foreign-exchange/theories-of-exchange-rate-determination-international-economics/30637 http://www.economicsdiscussion.net/foreign-exchange/theories...
- benlorenzetti 8y agoThanks! To all the others too.
- andrewla 8y agoSometimes "debasing" is used to describe the deliberate attempts to devalue money, either by printing more money, or, in earlier times, actually decreasing the amount of precious metals in favor of base metals in minted coins. There's not really a term for deliberate attempts to increase the value of the currency (as this is a policy goal not really pursued by modern central banks, as deflation is considered to be bad). Demurrage is a related concept, but rarely used in this sense.