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> 1: The root of inflation is the printing of money The root of inflation is an increase in the cost of goods & services. If the money supply increased, but t

> 1: The root of inflation is the printing of money The root of inflation is an increase in the cost of goods & services. If the money supply increased, but the head of every company willfully elected to ignore this (due to patriotic duty, for instance) and continue charging the same for their goods & services, then inflation would not occur.

notch656a 4y ago
Instead you would have shortages.
- hedora 4y ago
  Those lead to profitable gray/black markets, and then inflation.
- anonporridge 4y ago
  And a black market would rapidly develop to subvert the government's artificial constraint on the free market, and inflation would happen there to counter the shortages by creating real price signals to allow people to allocate resources as efficiently as possible to get to where they're most needed and earned. This is exactly what's happening in countries like Venezuela and Argentina with high inflation right now. The government has set an official forex exchange rate to try to make believe their currency is more valuable than it actually is, while the black market currency exchange gives you the true exchange rate that is reflected by real world markets. In some cases, this situation is fine, because the government just needs the fake numbers to push a political narrative. More commonly, I feel like this action starts a downward spiral of trust in a society's political class or the political system itself. This is probably a big thing that led to the collapse of communism.
  - acuozzo 4y ago
    > to subvert the government's artificial constraint on the free market No government constraint/restriction was mentioned in the hypothetical scenario I constructed.
- acuozzo 4y ago
  > Instead you would have shortages. This assumes an increase in spending rather than saving and/or paying down debt(s).
cryptonector 4y ago
> The root of inflation is an increase in the cost of goods & services. That's a tautology.
- acuozzo 4y ago
  No, it's not. Inflation, by definition, is a decrease in the purchasing power of money. Money can be spent on many things besides goods & services. Consider, for instance: securities, land/real estate, entire businesses, foreign currency, bribes, and gifts (of money).
  - cryptonector 4y ago
    > > > The root of inflation is an increase in the cost of goods & services. > > That's a tautology. > No, it's not. Inflation, by definition, is a decrease in the purchasing power of money. That's the definition, and it's the same as "an increase in the cost of goods & services". "The root [cause] of X is [definition of X]" is very much a tautology.
    - acuozzo 4y ago
      I gave examples of several other things which can be purchased with money that are not goods & services. "Purchasing power" is therefore not limited to goods & services, but I defined inflation as an increase in the cost of goods & services alone. A tautology this is not.

notch656a 4y ago

Instead you would have shortages.

hedora 4y ago
Those lead to profitable gray/black markets, and then inflation.
anonporridge 4y ago
And a black market would rapidly develop to subvert the government's artificial constraint on the free market, and inflation would happen there to counter the shortages by creating real price signals to allow people to allocate resources as efficiently as possible to get to where they're most needed and earned. This is exactly what's happening in countries like Venezuela and Argentina with high inflation right now. The government has set an official forex exchange rate to try to make believe their currency is more valuable than it actually is, while the black market currency exchange gives you the true exchange rate that is reflected by real world markets. In some cases, this situation is fine, because the government just needs the fake numbers to push a political narrative. More commonly, I feel like this action starts a downward spiral of trust in a society's political class or the political system itself. This is probably a big thing that led to the collapse of communism.
- acuozzo 4y ago
  > to subvert the government's artificial constraint on the free market No government constraint/restriction was mentioned in the hypothetical scenario I constructed.
acuozzo 4y ago
> Instead you would have shortages. This assumes an increase in spending rather than saving and/or paying down debt(s).

cryptonector 4y ago

> The root of inflation is an increase in the cost of goods & services. That's a tautology.

acuozzo 4y ago
No, it's not. Inflation, by definition, is a decrease in the purchasing power of money. Money can be spent on many things besides goods & services. Consider, for instance: securities, land/real estate, entire businesses, foreign currency, bribes, and gifts (of money).
- cryptonector 4y ago
  > > > The root of inflation is an increase in the cost of goods & services. > > That's a tautology. > No, it's not. Inflation, by definition, is a decrease in the purchasing power of money. That's the definition, and it's the same as "an increase in the cost of goods & services". "The root [cause] of X is [definition of X]" is very much a tautology.
  - acuozzo 4y ago
    I gave examples of several other things which can be purchased with money that are not goods & services. "Purchasing power" is therefore not limited to goods & services, but I defined inflation as an increase in the cost of goods & services alone. A tautology this is not.