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So, ignoring the digression into wealth transfer and central banking, we agree that... > [inflation] is a consequence of printing money as soon as the newly pr

• pdonis 7y ago
  > we agree that... > > [inflation] is a consequence of printing money as soon as the newly printed money gets out into the economy > ... is not a fully accurate statement? If you are saying I should have added a qualifier "assuming the rate of economic activity stays constant", yes, that qualifier should be there (if we define "inflation" as "increase in the average price level"). But I don't agree that any qualifiers like whether or not the money gets spent "foolishly" or "unwisely" need to be there. Also, our current measure of "rate of economic activity", GDP, is not independent of the money supply, because it measures "activity" in dollars. So the fact that US GDP is growing does not necessarily mean the real rate of economic activity is growing.
  • ethbro 7y ago
    Absolutely, on the denomination unit. Foolishly and unwisely were concise proxies for economic impact. My point was that simply increasing the money supply may or may not result in objective inflation over modest timescales. It certainly usually does, because foolish things are more politically popular than effective things. But it doesn't have to be so.