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>the true cause of inflation The definition* of inflation (monetary inflation). The Austrian distinction between monetary inflation and price inflation is inst

>the true cause of inflation The definition* of inflation (monetary inflation). The Austrian distinction between monetary inflation and price inflation is instructive. See for example https://www.quora.com/What-is-the-relationship-between-monetary-inflation-and-price-inflation https://www.quora.com/What-is-the-relationship-between-monet... And from the horse's mouth (Mises): >There is nowadays a very reprehensible, even dangerous, semantic confusion that makes it extremely difficult for the non-expert to grasp the true state of affairs. Inflation, as this term was always used everywhere and especially in this country [the United States], means increasing the quantity of money and bank notes in circulation and the quantity of bank deposits subject to check. But people today use the term "inflation" to refer to the phenomenon that is an inevitable consequence of inflation, that is the tendency of all prices and wage rates to rise. The result of this deplorable confusion is that there is no term left to signify the cause of this rise in prices and wages. There is no longer any word available to signify the phenomenon that has been, up to now, called inflation. It follows that nobody cares about inflation in the traditional sense of the term. As you cannot talk about something that has no name, you cannot fight it. Those who pretend to fight inflation are in fact only fighting what is the inevitable consequence of inflation, rising prices. Their ventures are doomed to failure because they do not attack the root of the evil.

notch656a 5y ago
It's always baffling to me people can simultaneously defend fairly liberal voluntary trade while supporting a command economy on one of the most important elements to trade -- currency. Clearly building an economy on an insidious command denominated currency threatens the entire market.
- lottin 5y ago
  Can you elaborate?
  - notch656a 5y ago
    Command economy of goods/services/financial instruments leads to inefficient markets. In systems where currency is subject to command economy (perhaps because it is in control by a minority of elected or unelected officials, who have a monopoly of control of the entirety of a national currency), it could result in additive inefficiencies to the entire market if the market is predicated on using that currency in trade. In general industries that are both a monopoly and centrally planned by governance yield sub-optimal results. Some people generally realize this when considering other goods, services, and financial instruments but oddly there are a number of those same people who fail to consider applying this also to currency.
    - lottin 5y ago
      Thank you. Currency is not subject to a command economy. Governments don't have a monopoly on the issuance currency. Private entities are free to issue currencies.
      - notch656a 5y ago
        I'm compelled to use US currency. Explain how I can trade 100% in another currency without being required acquire US currency to pay taxes on the profits on my trade. > Private entities are free to issue currencies. Yes and no. The government has a monopoly in some areas. For instance, Liberty Dollar was accused for issuing coinage, despite that coinage never representing itself as legal tender issued by Treasury. [ 18 U.S.C. § 486 ] DoJ suggested at the time they closed in on Liberty Dollar that they could interpret their constitutional authority as also going over restricting private notes in general, but I think the coinage was just their easiest route to secure a felony so they never had to resort to other means they believed they had available. The conviction of Liberty Dollar's owner has been interpreted by some as to set the precedent that silver coinage, when used as a currency, is a violation of 18 U.S.C. § 486. There's also the fact of (USD) currency being legal tender for debts (public and private), and it certainly has a position of privilege in that regard. I'm not sure if I could refuse USD as payment for a judgement, if say a contract or other case were taken to court. You also may want to view a glimpse into what the apparatus has to say about private issuance of currency [0]: “Attempts to undermine the legitimate currency of this country are simply a unique form of domestic terrorism,” U.S. Attorney Tompkins said in announcing the verdict. “While these forms of anti-government activities do not involve violence, they are every bit as insidious and represent a clear and present danger to the economic stability of this country,” she added. “We are determined to meet these threats through infiltration, disruption, and dismantling of organizations which seek to challenge the legitimacy of our democratic form of government.” While it may be technically legal, in practice you may be going to bed every night knowing that both the FBI and US Attorneys are going to bed thinking about how you're a 'domestic terrorist' and dreaming up how to make your life hell. In practice if the state apparatus sees what you are doing is wrong they can find a statute with which to destroy you, if they deem it worth their time. [0] https://archives.fbi.gov/archives/charlotte/press-releases/2011/defendant-convicted-of-minting-his-own-currency https://archives.fbi.gov/archives/charlotte/press-releases/2...
k__ 5y ago
If inflation is "inflating the amount of cash in circulation" then it doesn't seem like something that just happens (i.e. 2% inflation per year is totally normal) but something that is done deliberatly by people. Why is it done? Why would anyone, especially rich people, that their riches get worth less?
- von_lohengramm 5y ago
  The rich proportionally have less wealth in $, so this affects them less. Additionally, slight inflation tends to produce economic growth, furthering the value of their investments.
  - k__ 5y ago
    Because people spend more money if they fear it becomes worth less?
    - von_lohengramm 5y ago
      Exactly. If holding onto money made it go up in value, then why would you ever spend it? If you had BTC in 2010 and knew what would happen to its value over the years, would you still buy a pizza with it?
      - hammock 5y ago
        Yes, because you get hungry. You are using a common fallacy.
        von_lohengramm 5y ago
        If I was really that hungry, then maybe I'd walk to the grocery store & get some store-brand pasta instead of getting pizza delivered. It's not like spending money is an absolute thing where you spend all or nothing. If I know it's worth my while to save, then I'm not going to spend as much as I would have if I knew that my savings was becoming worthless.

notch656a 5y ago

It's always baffling to me people can simultaneously defend fairly liberal voluntary trade while supporting a command economy on one of the most important elements to trade -- currency. Clearly building an economy on an insidious command denominated currency threatens the entire market.

lottin 5y ago
Can you elaborate?
- notch656a 5y ago
  Command economy of goods/services/financial instruments leads to inefficient markets. In systems where currency is subject to command economy (perhaps because it is in control by a minority of elected or unelected officials, who have a monopoly of control of the entirety of a national currency), it could result in additive inefficiencies to the entire market if the market is predicated on using that currency in trade. In general industries that are both a monopoly and centrally planned by governance yield sub-optimal results. Some people generally realize this when considering other goods, services, and financial instruments but oddly there are a number of those same people who fail to consider applying this also to currency.
  - lottin 5y ago
    Thank you. Currency is not subject to a command economy. Governments don't have a monopoly on the issuance currency. Private entities are free to issue currencies.
    - notch656a 5y ago
      I'm compelled to use US currency. Explain how I can trade 100% in another currency without being required acquire US currency to pay taxes on the profits on my trade. > Private entities are free to issue currencies. Yes and no. The government has a monopoly in some areas. For instance, Liberty Dollar was accused for issuing coinage, despite that coinage never representing itself as legal tender issued by Treasury. [ 18 U.S.C. § 486 ] DoJ suggested at the time they closed in on Liberty Dollar that they could interpret their constitutional authority as also going over restricting private notes in general, but I think the coinage was just their easiest route to secure a felony so they never had to resort to other means they believed they had available. The conviction of Liberty Dollar's owner has been interpreted by some as to set the precedent that silver coinage, when used as a currency, is a violation of 18 U.S.C. § 486. There's also the fact of (USD) currency being legal tender for debts (public and private), and it certainly has a position of privilege in that regard. I'm not sure if I could refuse USD as payment for a judgement, if say a contract or other case were taken to court. You also may want to view a glimpse into what the apparatus has to say about private issuance of currency [0]: “Attempts to undermine the legitimate currency of this country are simply a unique form of domestic terrorism,” U.S. Attorney Tompkins said in announcing the verdict. “While these forms of anti-government activities do not involve violence, they are every bit as insidious and represent a clear and present danger to the economic stability of this country,” she added. “We are determined to meet these threats through infiltration, disruption, and dismantling of organizations which seek to challenge the legitimacy of our democratic form of government.” While it may be technically legal, in practice you may be going to bed every night knowing that both the FBI and US Attorneys are going to bed thinking about how you're a 'domestic terrorist' and dreaming up how to make your life hell. In practice if the state apparatus sees what you are doing is wrong they can find a statute with which to destroy you, if they deem it worth their time. [0] https://archives.fbi.gov/archives/charlotte/press-releases/2011/defendant-convicted-of-minting-his-own-currency https://archives.fbi.gov/archives/charlotte/press-releases/2...

k__ 5y ago

If inflation is "inflating the amount of cash in circulation" then it doesn't seem like something that just happens (i.e. 2% inflation per year is totally normal) but something that is done deliberatly by people. Why is it done? Why would anyone, especially rich people, that their riches get worth less?

von_lohengramm 5y ago
The rich proportionally have less wealth in $, so this affects them less. Additionally, slight inflation tends to produce economic growth, furthering the value of their investments.
- k__ 5y ago
  Because people spend more money if they fear it becomes worth less?
  - von_lohengramm 5y ago
    Exactly. If holding onto money made it go up in value, then why would you ever spend it? If you had BTC in 2010 and knew what would happen to its value over the years, would you still buy a pizza with it?
    - hammock 5y ago
      Yes, because you get hungry. You are using a common fallacy.
      - von_lohengramm 5y ago
        If I was really that hungry, then maybe I'd walk to the grocery store & get some store-brand pasta instead of getting pizza delivered. It's not like spending money is an absolute thing where you spend all or nothing. If I know it's worth my while to save, then I'm not going to spend as much as I would have if I knew that my savings was becoming worthless.