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Why would you expect there to be some unifying theory of inflation? It's an emergent phenomenon resulting from the actions of many individual actors. I'm quit

Why would you expect there to be some unifying theory of inflation? It's an emergent phenomenon resulting from the actions of many individual actors. I'm quite sure the people raising the prices every week had no idea how much cash was in circulation.

WalterBright 4y ago
Fiat money (or anything that increases the supply of money, like gold rushes) is the common factor with all instances of inflation. There are thousands of years of examples of this. You're right on one point, the Law of Supply & Demand. It is an emergent property of many individual actions, though each might be completely ignorant of the big picture.
- lottin 4y ago
  Another common factor in all cases of inflation was the moon orbiting the Earth, so clearly the moon is causing inflation.
  - WalterBright 4y ago
    Your theory doesn't explain deflation. Mine does.
- imtringued 4y ago
  Egyptians used grain money which spoils over time and the grain banks charged the depositors a fee for the liquidity they provide. If you want a stable banking system you are going to have to make depositors pay for the costs they impose onto other people.
  - WalterBright 4y ago
    I suggest reading up on how banks make money from fractional reserve banking. No need for depositors to pay, and in fact lending money is so lucrative banks will pay the depositors.
sidewndr46 4y ago
All you've done here is dress up the "it's really complicated, you wouldn't understand it" dismissal in nicer terms.
mypalmike 4y ago
Economists working for oil companies certainly don't ignore money supply.
Izkata 4y ago
One of the reasons to raise price is to discourage people from buying when you have limited stock. Sellers can tell where their supply is coming from, compare it to how much stock they have left, and compare that to normal times. So yeah, they do have such a signal, though it is secondary to the actual reason for the price increase.

WalterBright 4y ago

Fiat money (or anything that increases the supply of money, like gold rushes) is the common factor with all instances of inflation. There are thousands of years of examples of this. You're right on one point, the Law of Supply & Demand. It is an emergent property of many individual actions, though each might be completely ignorant of the big picture.

lottin 4y ago
Another common factor in all cases of inflation was the moon orbiting the Earth, so clearly the moon is causing inflation.
- WalterBright 4y ago
  Your theory doesn't explain deflation. Mine does.
imtringued 4y ago
Egyptians used grain money which spoils over time and the grain banks charged the depositors a fee for the liquidity they provide. If you want a stable banking system you are going to have to make depositors pay for the costs they impose onto other people.
- WalterBright 4y ago
  I suggest reading up on how banks make money from fractional reserve banking. No need for depositors to pay, and in fact lending money is so lucrative banks will pay the depositors.

sidewndr46 4y ago

All you've done here is dress up the "it's really complicated, you wouldn't understand it" dismissal in nicer terms.

mypalmike 4y ago

Economists working for oil companies certainly don't ignore money supply.

Izkata 4y ago

One of the reasons to raise price is to discourage people from buying when you have limited stock. Sellers can tell where their supply is coming from, compare it to how much stock they have left, and compare that to normal times. So yeah, they do have such a signal, though it is secondary to the actual reason for the price increase.