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More money inflates the supply of money. This is why cryptocurrencies that burn crypto are considered deflationary. These Econ professors are responsible for

More money inflates the supply of money. This is why cryptocurrencies that burn crypto are considered deflationary. These Econ professors are responsible for inflating a giant bubble based on their politically motivated propaganda. Inflation is not about prices, it’s about simple math. Printing dollars out of thin air, makes the ones in your pocket less powerful. But if you are a the direct beneficiary of the newly printed dollars, (government) who cares! You get to spend it!

quadrangle 5y ago
"Inflation is not about prices" is the silliest thing I've ever heard. You might as well say that gravity has nothing to do with up and down. The only thing anyone MEANS when they say "inflation" is that it's short for "price inflation". But to deal with your point directly: if the U.S. Treasury literally printed a quadrillion dollar bill but then gave it to someone with a contract saying that they agree never to spend it, it will have zero effect on anything. And if people get dollars and never spend them, it's the same effect in practice. Or if someone with a quadrillion-dollar bill gives it as a gift to someone else who then later gifts it, and that's all that ever happens… again, no effect on inflation. Inflation is one thing and one thing only: it's when people who make the decisions about setting prices for things choose to inflate (increase) the prices and that this happens on a noticeable system-wide scale. If the people who set prices chose not to change them, there would be no inflation, period. The interesting thing in studying inflation amounts to studying what patterns correlate with people making the decision to increase prices. And yes, knowledge that buyers have more dollars to spend is a factor that could (and does) influence those decisions on setting prices. The same thing happens with "demand" (so, that professor I summarized above is still not quite right when he asserts that demand and spending is what causes inflation). Sellers can very well (and do often enough) keep prices unchanged even when demand is high and everything just sells out quickly. The result of that isn't inflation, it's shortages — unless the shortages somehow motivate people to just produce more — in which case increased spending just leads to increased production and consumption without inflation or shortages. Shortages don't mathematically cause inflation. Inflation ONLY EVER happens if price-setters choose to increase prices. Nobody is EVER forced to increase prices. You just have the ramifications of doing so or not. Maybe keeping prices the same means less profit. Or maybe it means going bankrupt. And yes, any one decision to change a price has an impact on other people who may choose other prices. That's why all the interacting decisions from all the actors adds up to patterns we can potentially (but always imperfectly) predict. This is human beings making decisions and taking action in a complex game we play around money. Yes, there are mathematical aspects to it. But it's not some pure math abstraction. And relying too heavily on math abstractions is one of the deepest flaws in the whole field of economics.
- randmeerkat 5y ago
  > You might as well say that gravity has nothing to do with up and down. To be pedantic, gravity has nothing to do with “up” or “down”, it’s just the attraction of two or more masses relative to one another. “Up” or “down” is perspective. If someone on the South Pole is looking up and someone on the North Pole is looking down, an argument could be made that the person on the South Pole is actually looking down.
  - quadrangle 5y ago
    This is really tangential, but "up" and "down" are completely meaningless without gravity. Literally, without gravity, "up" doesn't exist. "Up" is literally just "away from the primary gravitational pull". People on either pole looking away from the planet are both looking up. That's what "up" is. It's funny to realize that two people can look "up" in opposite directions, but that's what's going on. Neither of them is looking "down", even though each one is looking in the direction of the other person's down.
    - randmeerkat 5y ago
      “From our experiments, the presence of gravity appears to be a sufficient condition to evoke up/down biases in interceptive responses, at least in some subjects. It is not, however, a necessary condition. Indeed, it is thought that a network of connections involving the insulae and temporoparietal junction of the brain integrates a variety of sensory modalities to define an up/down reference frame and then tunes fast interceptive responses within that context (Indovina et al., 2005).” https://www.jneurosci.org/content/32/6/1969 https://www.jneurosci.org/content/32/6/1969 TLDR; Up and Down is just perception and has nothing to do with gravity.
      - quadrangle 5y ago
        Up and down are perceptions that we evolved specifically to indirectly sense gravity. "nothing to do with" is wrong, it's like saying that thermometers have nothing to do with temperature because various versions of them can get miscalibrated and are really visual devices.
majormajor 5y ago
> More money inflates the supply of money. This is why cryptocurrencies that burn crypto are considered deflationary. Crypto isn't in a vaccuum. If the only currency in the world was bitcoin, sure, call it deflationary. But compared to a decade ago, there are far more dollars floating around thanks to crypto. Not only are there are the rich people holding dollars and other currency, or gold, etc, but we've invented a bunch of crypto tokens that we also value massively, so you can be bitcoin-rich or ethereum-rich or nft-rich OR currency-rich... which is no different than printing currency out of thin air.
- quadrangle 5y ago
  > there are far more dollars floating around thanks to crypto Uh no, cryptocurrencies can't generate USD. But if you meant "dollars" as a generic term for currency, then sure, kinda yeah, to the degree that cryptocurrencies are actually working as currencies (which they mostly are not). Anyway, the "deflationary" claim is internal to a cryptocurrency. Nobody is asserting that cryptocurrencies cause deflation of USD.
  - ravel-bar-foo 5y ago
    > Uh no, cryptocurrencies can't generate USD. If I buy crypto from a miner, the dollars don't disappear. The miner uses it to buy energy and semiconductors, which makes its way around the econony until some miniscule fraction of it comes back to me. (The loss of assets in the economy needed to create the transaction does not destroy dollars, but it does destroy finite resources such as fuel or sunlight for energy, the time of the people involved in the supply chain, etc. In that sense, buying crypto generates USD: we end the process having completed the reaction Dollars + fuel/energy/resources + time -> Dollars + Crypto So if one values crypto more than fuel/energy/resouces + time (say, because crypto is deflationary and its value will rise faster than that of the natural resources used to create it, then it does look (if you squint at it) like dollars are generated: the crypto can be sold later for more than the dollars. At the individual level, the transaction might be even more biased: dollars -> crypto now looks a lot like it generates dollars later if dollars are inflationary and crypto is deflationary (with stable demand for crypto).
lottin 5y ago
> This is why cryptocurrencies that burn crypto are considered deflationary. By whom? The idea of a "deflationary currency" isn't supported by any economic theory.
jessaustin 5y ago
Printing dollars out of thin air, makes the ones in your pocket less powerful. We've been doing this "thin air" thing for twenty years. Why has it only caused inflation over the last several months?
- coryrc 5y ago
  Graph housing and health care prices. Maybe low inflation was a lie all along.
  - jessaustin 5y ago
    OK, sure, let's assume inflation has been understated this whole time. (That might even be true!) Do you suggest that it's less understated now? If not, we still don't see the simple relation suggested upthread between inflation and a hypothetical "incorrect" Fed policy, since Fed policy has been pedal-to-the-metal for a long time.
    - coryrc 5y ago
      I think the current reported inflation is related to notable supply (eg ICs) or demand (eg home improvement) changes, as a first order cause. But why do so many have excessive money to burn on increasing demand? Because asset prices are propped up with Fed dollars and no-interest loans.
RC_ITR 5y ago
Why does nobody ever think about the supply of goods and services side of the inflation equation?!?! If you print dollars faster than the real economy can create new things to buy that causes inflation, but only then and in recent history that’s only happened because of a pandemic. I really don’t know why that isn’t talked about more.

quadrangle 5y ago

"Inflation is not about prices" is the silliest thing I've ever heard. You might as well say that gravity has nothing to do with up and down. The only thing anyone MEANS when they say "inflation" is that it's short for "price inflation". But to deal with your point directly: if the U.S. Treasury literally printed a quadrillion dollar bill but then gave it to someone with a contract saying that they agree never to spend it, it will have zero effect on anything. And if people get dollars and never spend them, it's the same effect in practice. Or if someone with a quadrillion-dollar bill gives it as a gift to someone else who then later gifts it, and that's all that ever happens… again, no effect on inflation. Inflation is one thing and one thing only: it's when people who make the decisions about setting prices for things choose to inflate (increase) the prices and that this happens on a noticeable system-wide scale. If the people who set prices chose not to change them, there would be no inflation, period. The interesting thing in studying inflation amounts to studying what patterns correlate with people making the decision to increase prices. And yes, knowledge that buyers have more dollars to spend is a factor that could (and does) influence those decisions on setting prices. The same thing happens with "demand" (so, that professor I summarized above is still not quite right when he asserts that demand and spending is what causes inflation). Sellers can very well (and do often enough) keep prices unchanged even when demand is high and everything just sells out quickly. The result of that isn't inflation, it's shortages — unless the shortages somehow motivate people to just produce more — in which case increased spending just leads to increased production and consumption without inflation or shortages. Shortages don't mathematically cause inflation. Inflation ONLY EVER happens if price-setters choose to increase prices. Nobody is EVER forced to increase prices. You just have the ramifications of doing so or not. Maybe keeping prices the same means less profit. Or maybe it means going bankrupt. And yes, any one decision to change a price has an impact on other people who may choose other prices. That's why all the interacting decisions from all the actors adds up to patterns we can potentially (but always imperfectly) predict. This is human beings making decisions and taking action in a complex game we play around money. Yes, there are mathematical aspects to it. But it's not some pure math abstraction. And relying too heavily on math abstractions is one of the deepest flaws in the whole field of economics.

randmeerkat 5y ago
> You might as well say that gravity has nothing to do with up and down. To be pedantic, gravity has nothing to do with “up” or “down”, it’s just the attraction of two or more masses relative to one another. “Up” or “down” is perspective. If someone on the South Pole is looking up and someone on the North Pole is looking down, an argument could be made that the person on the South Pole is actually looking down.
- quadrangle 5y ago
  This is really tangential, but "up" and "down" are completely meaningless without gravity. Literally, without gravity, "up" doesn't exist. "Up" is literally just "away from the primary gravitational pull". People on either pole looking away from the planet are both looking up. That's what "up" is. It's funny to realize that two people can look "up" in opposite directions, but that's what's going on. Neither of them is looking "down", even though each one is looking in the direction of the other person's down.
  - randmeerkat 5y ago
    “From our experiments, the presence of gravity appears to be a sufficient condition to evoke up/down biases in interceptive responses, at least in some subjects. It is not, however, a necessary condition. Indeed, it is thought that a network of connections involving the insulae and temporoparietal junction of the brain integrates a variety of sensory modalities to define an up/down reference frame and then tunes fast interceptive responses within that context (Indovina et al., 2005).” https://www.jneurosci.org/content/32/6/1969 https://www.jneurosci.org/content/32/6/1969 TLDR; Up and Down is just perception and has nothing to do with gravity.
    - quadrangle 5y ago
      Up and down are perceptions that we evolved specifically to indirectly sense gravity. "nothing to do with" is wrong, it's like saying that thermometers have nothing to do with temperature because various versions of them can get miscalibrated and are really visual devices.

majormajor 5y ago

> More money inflates the supply of money. This is why cryptocurrencies that burn crypto are considered deflationary. Crypto isn't in a vaccuum. If the only currency in the world was bitcoin, sure, call it deflationary. But compared to a decade ago, there are far more dollars floating around thanks to crypto. Not only are there are the rich people holding dollars and other currency, or gold, etc, but we've invented a bunch of crypto tokens that we also value massively, so you can be bitcoin-rich or ethereum-rich or nft-rich OR currency-rich... which is no different than printing currency out of thin air.

quadrangle 5y ago
> there are far more dollars floating around thanks to crypto Uh no, cryptocurrencies can't generate USD. But if you meant "dollars" as a generic term for currency, then sure, kinda yeah, to the degree that cryptocurrencies are actually working as currencies (which they mostly are not). Anyway, the "deflationary" claim is internal to a cryptocurrency. Nobody is asserting that cryptocurrencies cause deflation of USD.
- ravel-bar-foo 5y ago
  > Uh no, cryptocurrencies can't generate USD. If I buy crypto from a miner, the dollars don't disappear. The miner uses it to buy energy and semiconductors, which makes its way around the econony until some miniscule fraction of it comes back to me. (The loss of assets in the economy needed to create the transaction does not destroy dollars, but it does destroy finite resources such as fuel or sunlight for energy, the time of the people involved in the supply chain, etc. In that sense, buying crypto generates USD: we end the process having completed the reaction Dollars + fuel/energy/resources + time -> Dollars + Crypto So if one values crypto more than fuel/energy/resouces + time (say, because crypto is deflationary and its value will rise faster than that of the natural resources used to create it, then it does look (if you squint at it) like dollars are generated: the crypto can be sold later for more than the dollars. At the individual level, the transaction might be even more biased: dollars -> crypto now looks a lot like it generates dollars later if dollars are inflationary and crypto is deflationary (with stable demand for crypto).

lottin 5y ago

> This is why cryptocurrencies that burn crypto are considered deflationary. By whom? The idea of a "deflationary currency" isn't supported by any economic theory.

jessaustin 5y ago

Printing dollars out of thin air, makes the ones in your pocket less powerful. We've been doing this "thin air" thing for twenty years. Why has it only caused inflation over the last several months?

coryrc 5y ago
Graph housing and health care prices. Maybe low inflation was a lie all along.
- jessaustin 5y ago
  OK, sure, let's assume inflation has been understated this whole time. (That might even be true!) Do you suggest that it's less understated now? If not, we still don't see the simple relation suggested upthread between inflation and a hypothetical "incorrect" Fed policy, since Fed policy has been pedal-to-the-metal for a long time.
  - coryrc 5y ago
    I think the current reported inflation is related to notable supply (eg ICs) or demand (eg home improvement) changes, as a first order cause. But why do so many have excessive money to burn on increasing demand? Because asset prices are propped up with Fed dollars and no-interest loans.

RC_ITR 5y ago

Why does nobody ever think about the supply of goods and services side of the inflation equation?!?! If you print dollars faster than the real economy can create new things to buy that causes inflation, but only then and in recent history that’s only happened because of a pandemic. I really don’t know why that isn’t talked about more.