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Inflation may occur due to uncontrollable factors, like scarcity of resources as they are consumed at a basic rate. Increasing scarcity means everyone must now

by mlthoughts2018 7y ago

Inflation may occur due to uncontrollable factors, like scarcity of resources as they are consumed at a basic rate. Increasing scarcity means everyone must now compete harder to get the same basic rate of consumption from the reduced resource pool size, regardless of whether corporations or investments or governments even existed at all. Another source of inflation is increasing wage & benefit demands, especially from large middle or lower classes who want to afford to consume more because they value the greater consumption as an important part of life, a noble and intrinsically morally good goal of bettering one’s self through self-determined hard work such that the value of your labor and skill increases over time. In direct response to large classes of workers demanding more pay & benefits, companies will raise their prices to pay for those increases, again totally regardless of whether a stock market exists. I think really inflation is a side-effect of nature, and thinking along the lines of how to long-term control or remove it is counter-productive, compared with accepting that it is inevitable and then trying to come to terms with living in the future world that this implies.

pjc50 7y ago
Inflation is a side effect of monetary and fiscal policy; central banks are now quite good at adjusting interest rates to keep inflation in the 0-2% band. > In direct response to large classes of workers demanding more pay & benefits, companies will raise their prices to pay for those increases, again totally regardless of whether a stock market exists. How well this works is down to the "tightness" of the labour market. Central bank policy affects this: raise interest rates -> decrease investment -> increase unemployment above the "NAIRU" ("non-accelerating inflation rate of unemployment") -> workers are unable to demand pay increases as they may be replaced by eager cheaper workers from the pool of unemployed.
- lonelappde 7y ago
  > quite good at adjusting interest rates and manipulating measurements
- mlthoughts2018 7y ago
  Even in a barter economy with no government, money system or central fiscal planning there can be inflation. Inflation is nothing more than sustained higher prices for the same amount of goods or service, no matter the cause. Prices could be denominated in fiat money, currency, bartered physical goods, time, whatever. Inflation could be localized to a cafeteria where kids are trading lunch items for the best desserts, or span the globe in ways that transcend any given government’s ability to use fiscal and monetary policy. Inflation caused by Federal Reserve actions is just one (minor) type of inflation.

pjc50 7y ago

Inflation is a side effect of monetary and fiscal policy; central banks are now quite good at adjusting interest rates to keep inflation in the 0-2% band. > In direct response to large classes of workers demanding more pay & benefits, companies will raise their prices to pay for those increases, again totally regardless of whether a stock market exists. How well this works is down to the "tightness" of the labour market. Central bank policy affects this: raise interest rates -> decrease investment -> increase unemployment above the "NAIRU" ("non-accelerating inflation rate of unemployment") -> workers are unable to demand pay increases as they may be replaced by eager cheaper workers from the pool of unemployed.

lonelappde 7y ago
> quite good at adjusting interest rates and manipulating measurements
mlthoughts2018 7y ago
Even in a barter economy with no government, money system or central fiscal planning there can be inflation. Inflation is nothing more than sustained higher prices for the same amount of goods or service, no matter the cause. Prices could be denominated in fiat money, currency, bartered physical goods, time, whatever. Inflation could be localized to a cafeteria where kids are trading lunch items for the best desserts, or span the globe in ways that transcend any given government’s ability to use fiscal and monetary policy. Inflation caused by Federal Reserve actions is just one (minor) type of inflation.