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It isn't a straw man. The theory states that inflation will continuously increase at an accelerating rate as long as employment is above the "natural level". Fo

It isn't a straw man. The theory states that inflation will continuously increase at an accelerating rate as long as employment is above the "natural level". For any definition of hyper-inflation, proponents of NAIRU believe that we will meet that definition at some point if employment stays too high. > Only with continuously accelerating inflation could rates of unemployment below the natural rate be maintained. [0] [0]: https://en.wikipedia.org/wiki/NAIRU#The_natural_rate_hypothesis https://en.wikipedia.org/wiki/NAIRU#The_natural_rate_hypothe...

sumtechguy 6y ago
For it to be basically unlimited inflation would mean there is an unlimited amount of cash and capital and capital in the system. That seems on the surface improbable. It strikes more as one of the formulas has gone off the chart and someone is making assumptions.
- strbean 6y ago
  Well, my own view is that NAIRU is a complete crock. shrug
- CountSessine 6y ago
  Why? If prices and wages keep going up in step, why did you need unlimited cash and capital? You just keep raising people’s wages with the increasingly worthless cash you earn in revenues?
  - sumtechguy 6y ago
    Eventually there would be some sort of equilibrium. There can be 'infinite cash' which would be inflationary. But with capital there is a finite amount of it. Most central banks only allow a particular amount of cash into their systems. So the 'printing press' would probably not be true either. But it can if they crank it up. Cash is a short term proxy of capital. Capital is limited as you can not make infinite amount of things. At least that is what I am thinking. There would have to be a ceiling to it. Now if you erode trust in the capital to cash proxy (with massive amounts of inflation/deflation) the equilibrium is met quickly as unemployment would rise as people would not trust cash transactions and bartering would enter the picture again. This is the downfall of most economic theories people hold. They miss taking it a step or two out and assume all conditions will hold true forever. The market changes. You can eat a bad egg for breakfast and decide you hate eggs forever. Yet the day before eggs would have been an acceptable form of breakfast transaction. Now these theories have a place to play 'what if'. But usually are not that good to follow.

sumtechguy 6y ago

For it to be basically unlimited inflation would mean there is an unlimited amount of cash and capital and capital in the system. That seems on the surface improbable. It strikes more as one of the formulas has gone off the chart and someone is making assumptions.

strbean 6y ago
Well, my own view is that NAIRU is a complete crock. shrug
CountSessine 6y ago
Why? If prices and wages keep going up in step, why did you need unlimited cash and capital? You just keep raising people’s wages with the increasingly worthless cash you earn in revenues?
- sumtechguy 6y ago
  Eventually there would be some sort of equilibrium. There can be 'infinite cash' which would be inflationary. But with capital there is a finite amount of it. Most central banks only allow a particular amount of cash into their systems. So the 'printing press' would probably not be true either. But it can if they crank it up. Cash is a short term proxy of capital. Capital is limited as you can not make infinite amount of things. At least that is what I am thinking. There would have to be a ceiling to it. Now if you erode trust in the capital to cash proxy (with massive amounts of inflation/deflation) the equilibrium is met quickly as unemployment would rise as people would not trust cash transactions and bartering would enter the picture again. This is the downfall of most economic theories people hold. They miss taking it a step or two out and assume all conditions will hold true forever. The market changes. You can eat a bad egg for breakfast and decide you hate eggs forever. Yet the day before eggs would have been an acceptable form of breakfast transaction. Now these theories have a place to play 'what if'. But usually are not that good to follow.