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This could easily be turned around to say that since innovation naturally lowers prices over time, inflation is greatly underestimated. Say that without monetar
by danenania 16y ago
This could easily be turned around to say that since innovation naturally lowers prices over time, inflation is greatly underestimated. Say that without monetary expansion, prices would decrease 3 percent per year. This would mean that in reality inflation is 3 points higher than its nominal value.
- nostrademons 16y agoThat's an odd definition of "inflation" you have, where a quantity that supposedly measures the rate of change in prices is positive even though the rate of change in prices is negative...
- danenania 16y agoIs it really odd to measure relative to the actual natural base rate of inflation, which is negative in a healthy economy, instead of ignoring opportunity cost and arbitrarily assigning zero as the base rate? If an economy's natural rate of inflation would be -3%, but government monetary expansion keeps it at zero, are you just going to pretend there's no inflation?
- yummyfajitas 16y agoYou seem to wish that "inflation" was defined as "monetary expansion". It isn't.
- danenania 16y agoSome economists do define it that way, but that wasn't my argument. However, I do see your point if we define inflation as strictly the rise in prices, which certainly is the most common definition. My reasoning was off.
- deleted 16y ago[deleted]