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This is the "common sense" view of inflation. It was disproven by Milton Friedman and others over 50 years ago. “Inflation is always and everywhere a monetary
by BurningFrog 5y ago
This is the "common sense" view of inflation. It was disproven by Milton Friedman and others over 50 years ago.
“Inflation is always and everywhere a monetary phenomenon in the sense that it is and can be produced only by a more rapid increase in the quantity of money than in output.”
In 2021, "the quantity of money" is a much harder concept to measure than it was, but the basic insight stands.
- fartcannon 5y agoCan you actually prove things in economics? Or is it more like detailed analysis of history?
- BurningFrog 5y agoIn Macroeconomics, it's often very hard, because once you've understood something, the various actors can adapt to the new knowledge, and then you have a new and different world economy. That is, if you publish your findings. I assume there are unpublished insights people use to get rich off. I think Friedman's analysis was mostly historical. At least that what I got from reading his book. I've certainly not read any academic papers. In Microeconomics, people can and do prove things based on models that are quite good at approximating reality.
- pjc50 5y agoWrong dead economist: https://www.khanacademy.org/economics-finance-domain/macroeconomics/income-and-expenditure-topic/macroeconomics-keynesian-economics-and-its-critiques/a/the-phillips-curve-cnx https://www.khanacademy.org/economics-finance-domain/macroec... The interest/unemployment mechanism for controlling inflation has worked really well, and is why most of the Western world can hit its 2% inflation targets.