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

by kerng 5y ago

nostromo 5y 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 5y 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 5y 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 5y 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 5y 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 5y 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 5y 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.

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

by kerng 5y ago

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

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 5y 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 5y 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 5y 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 5y 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 5y 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 5y 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.