4 ms·

The article equates usd inflation with the increase in the supply of dogecoin, but the two charts measure completely different things.

kerng 6y ago
Can you elaborate? I was recently thinking similar to what the article mentions and wonder about differences?
- nostromo 6y ago
  I’m not the commenter, but I agree. Inflation shows how much prices have risen in a given year, not how many new dollars are in circulation. You can measure inflation in the US economy using any currency - gold, USD, BTC.
  - insert_coin 6y ago
    Inflation can be increases in prices, and it is used in this way by most modern economists, except hard money economists to whom inflation is by definition the increase in money supply irrespective of prices. In this sense, inflation is what causes price increases but isn't price increases. The article is talking with this second, or original definition of inflation.
    - arcticbull 6y ago
      Inflation is calculated from the increase in prices. It's a measure of the drop in buying power post facto. The earlier definition is incomplete as it does not take into account velocity. For instance, if you print a $1T coin and hand it to me, then I throw it into a vault, supply went up but nothing changed with respect to prices, because velocity went down commensurately. The earlier definition does not match observable reality.
      - insert_coin 6y ago
        That is only because what you are interested in IS price increases. If what you are interested in is money supply, and you call that inflation, then it doesn't matter what you do with the money, you can store it, you can burn it, you can spend it, is all the same. It doens't matter if prices go up either, that is irrelevant under this definition of inflation. Inflation used to mean money supply. Inflation now means price increases. People thinking they are talking about the same thing when they use the word inflation is where the confusion is coming from.
        arcticbull 6y ago
        The issue is that inflation as a function of supply alone is an incomplete model, not particularly meaningful and has been long-since debunked. Trying to resurrect an incomplete model isn't a great idea IMO.
        insert_coin 6y ago
        I am not arguing with you about the utility of each definition, I'm just pointing out the difference in use and why you keep talking past each other.
- Finnucane 6y ago
  The inflation rate is a measure of price changes of a large basket of goods. In a real economy, this can be affected by a number of different (but connected) things—the expansion and contraction of credit, the velocity of money (the rate money flows through the economy), foreign debt (esp, debt in another country’s currency), and so on. The dogecoin chart only shows base supply, which is not really a complete picture of economic function.
stepanhruda 6y ago
Because the easiest way to cause significant inflation is to increase money supply? No one really uses doge for anything else, so that seems like a very good proxy. If compared to M1 or M2 doge would actually fare much better.
- paulpauper 6y ago
  despite tons of covid stimulus and fed intervention, CPI still very low
  - arcticbull 6y ago
    This is likely attributable to savings rates being at near all-time high in the US causing velocity to fall off. If people are saving not spending, there is no additional demand for goods, which means their prices do not rise, and inflation does not materialize. [1] https://fred.stlouisfed.org/series/PSAVERT https://fred.stlouisfed.org/series/PSAVERT
  - anm89 6y ago
    CPI is a terrible metric. Also prices are sticky and velocity is irregular. Pumping out money is not going to increase prices in the immediate months following regardless.
- Finnucane 6y ago
  Japan has been trying to create inflation for decades by monetary expansion, monetizing their debt, zero interest rates, all the tricks. It has mostly failed. It is _not_ the easiest way to cause significant inflation.
  - gruez 6y ago
    >It is _not_ the easiest way to cause significant inflation. Or maybe they're not solely interested in causing inflation, and are concerned about other effects as well? eg. preventing hyperinflation. If all you wanted to do is cause inflation, you can do so very easily with helicopter money.
paulpauper 6y ago
agree. USD inflation is sorta meaningless. way matters more is the CPI, which is not necessarily correlated with how much money there is

kerng 6y ago

Can you elaborate? I was recently thinking similar to what the article mentions and wonder about differences?

nostromo 6y ago
I’m not the commenter, but I agree. Inflation shows how much prices have risen in a given year, not how many new dollars are in circulation. You can measure inflation in the US economy using any currency - gold, USD, BTC.
- insert_coin 6y ago
  Inflation can be increases in prices, and it is used in this way by most modern economists, except hard money economists to whom inflation is by definition the increase in money supply irrespective of prices. In this sense, inflation is what causes price increases but isn't price increases. The article is talking with this second, or original definition of inflation.
  - arcticbull 6y ago
    Inflation is calculated from the increase in prices. It's a measure of the drop in buying power post facto. The earlier definition is incomplete as it does not take into account velocity. For instance, if you print a $1T coin and hand it to me, then I throw it into a vault, supply went up but nothing changed with respect to prices, because velocity went down commensurately. The earlier definition does not match observable reality.
    - insert_coin 6y ago
      That is only because what you are interested in IS price increases. If what you are interested in is money supply, and you call that inflation, then it doesn't matter what you do with the money, you can store it, you can burn it, you can spend it, is all the same. It doens't matter if prices go up either, that is irrelevant under this definition of inflation. Inflation used to mean money supply. Inflation now means price increases. People thinking they are talking about the same thing when they use the word inflation is where the confusion is coming from.
      - arcticbull 6y ago
        The issue is that inflation as a function of supply alone is an incomplete model, not particularly meaningful and has been long-since debunked. Trying to resurrect an incomplete model isn't a great idea IMO.
        insert_coin 6y ago
        I am not arguing with you about the utility of each definition, I'm just pointing out the difference in use and why you keep talking past each other.
Finnucane 6y ago
The inflation rate is a measure of price changes of a large basket of goods. In a real economy, this can be affected by a number of different (but connected) things—the expansion and contraction of credit, the velocity of money (the rate money flows through the economy), foreign debt (esp, debt in another country’s currency), and so on. The dogecoin chart only shows base supply, which is not really a complete picture of economic function.

stepanhruda 6y ago

Because the easiest way to cause significant inflation is to increase money supply? No one really uses doge for anything else, so that seems like a very good proxy. If compared to M1 or M2 doge would actually fare much better.

paulpauper 6y ago
despite tons of covid stimulus and fed intervention, CPI still very low
- arcticbull 6y ago
  This is likely attributable to savings rates being at near all-time high in the US causing velocity to fall off. If people are saving not spending, there is no additional demand for goods, which means their prices do not rise, and inflation does not materialize. [1] https://fred.stlouisfed.org/series/PSAVERT https://fred.stlouisfed.org/series/PSAVERT
- anm89 6y ago
  CPI is a terrible metric. Also prices are sticky and velocity is irregular. Pumping out money is not going to increase prices in the immediate months following regardless.
Finnucane 6y ago
Japan has been trying to create inflation for decades by monetary expansion, monetizing their debt, zero interest rates, all the tricks. It has mostly failed. It is _not_ the easiest way to cause significant inflation.
- gruez 6y ago
  >It is _not_ the easiest way to cause significant inflation. Or maybe they're not solely interested in causing inflation, and are concerned about other effects as well? eg. preventing hyperinflation. If all you wanted to do is cause inflation, you can do so very easily with helicopter money.

paulpauper 6y ago

agree. USD inflation is sorta meaningless. way matters more is the CPI, which is not necessarily correlated with how much money there is