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I'm not sure I follow your line of thinking. The cause of inflation is an increase in the cost of goods and services. This is a choice that individuals within

I'm not sure I follow your line of thinking. The cause of inflation is an increase in the cost of goods and services. This is a choice that individuals within companies make. It is not a natural consequence of increasing the money supply.

verelo 4y ago
So this is the crux of the problem. Someone is wrong. I’d say it is a major factor of over supplying the market with capital. You’re saying it isn’t?
- acuozzo 4y ago
  I'm saying that the root cause of the problem is speculation. Price adjusters within companies are using the news of the increased money supply to gamble that customers will pay more and they've been right, so far. There's quite a bit of tacit collusion driving this, of course, but it's also a self-fulfilling prophecy. Price adjusters within companies know that everyone believes that printing money "causes" inflation, so they take advantage of the opportunity.
s1artibartfast 4y ago
The thought is pretty straight forward. Prices are a function of supply and demand. If buyers have more cash, they are willing to pay more, so prices go up. If you increase the money supply and that money gets into the hands of buyers, the prices will rise.
- acuozzo 4y ago
  Are there no humans involved in the process of raising prices?
  - s1artibartfast 4y ago
    yes, on both sides. How much a human is willing to pay, and how much a human thinks they can get. If your point is simply that businesses are choosing to maximize profit, that of course is correct. It always has been unless you are a non-profit or state owned enterprise. The salient question is what conditions changed in the economy so that they can increase prices. It isnt like they were running as charities before.
    - acuozzo 4y ago
      > The salient question is what conditions changed in the economy so that they can increase prices. Agreed. > If your point is simply that businesses are choosing to maximize profit, that of course is correct. My point is pedantic and political. I don't like humans being removed from the equation. Framing inflation as a natural consequence of increasing the money supply is one way to do that. The widespread thinking that "businesses exist to maximize profits" is another. (Yes, I'm aware of obligations to shareholders in corporations, but that's beside my point.) Removing humans from the equation makes abuses just palatable enough to go down.
      - s1artibartfast 4y ago
        I personally don't think that raising prices is abusive or even unethical. A tenant of voluntary labor and exchange is the ability to set your own price. Like you said, it is an inherently human choice. I would be curious to hear how you think economic interactions should work.
deleted 4y ago
[deleted]
starkd 4y ago
The increase cost of goods and service is not the cause of inflation, it is the definition of inflation. The cause is increased supply of money along with velocity of money.
- acuozzo 4y ago
  Would inflation occur if all companies decided to act together patriotically and not increase what they're charging in response to the increased money supply? > it is the definition of inflation Doesn't the definition of inflation have more to do with the decreased value of currency? There are plenty of uses for currency outside of the purchase of goods and services.
  - s1artibartfast 4y ago
    Yes. If buyers have cash piling up and companies magically decided to hold prices, the cash would just flow into whatever could be still be bought, probably housing. In reality, the only thing that puts downward pressure on prices is if people cant afford them.
    - acuozzo 4y ago
      > the cash would just flow into whatever could be still be bought, probably housing How would this decrease the value of the currency? It would certainly reduce asset availability, but— to use your example —there's an absurd surplus of housing nationwide.
      - s1artibartfast 4y ago
        housing is one factor in tracking the value of a currency. Assume we freeze the prices of consumer goods, cost of housing still figures into your budget and cost of living. >It would certainly reduce asset availability, but— to use your example —there's an absurd surplus of housing nationwide. I cant relate to this idea of an absurd housing surplus. It simply doesn't match m understanding of reality. Housing prices have gone through the roof almost everywhere people want to live.

verelo 4y ago

So this is the crux of the problem. Someone is wrong. I’d say it is a major factor of over supplying the market with capital. You’re saying it isn’t?

acuozzo 4y ago
I'm saying that the root cause of the problem is speculation. Price adjusters within companies are using the news of the increased money supply to gamble that customers will pay more and they've been right, so far. There's quite a bit of tacit collusion driving this, of course, but it's also a self-fulfilling prophecy. Price adjusters within companies know that everyone believes that printing money "causes" inflation, so they take advantage of the opportunity.

s1artibartfast 4y ago

The thought is pretty straight forward. Prices are a function of supply and demand. If buyers have more cash, they are willing to pay more, so prices go up. If you increase the money supply and that money gets into the hands of buyers, the prices will rise.

acuozzo 4y ago
Are there no humans involved in the process of raising prices?
- s1artibartfast 4y ago
  yes, on both sides. How much a human is willing to pay, and how much a human thinks they can get. If your point is simply that businesses are choosing to maximize profit, that of course is correct. It always has been unless you are a non-profit or state owned enterprise. The salient question is what conditions changed in the economy so that they can increase prices. It isnt like they were running as charities before.
  - acuozzo 4y ago
    > The salient question is what conditions changed in the economy so that they can increase prices. Agreed. > If your point is simply that businesses are choosing to maximize profit, that of course is correct. My point is pedantic and political. I don't like humans being removed from the equation. Framing inflation as a natural consequence of increasing the money supply is one way to do that. The widespread thinking that "businesses exist to maximize profits" is another. (Yes, I'm aware of obligations to shareholders in corporations, but that's beside my point.) Removing humans from the equation makes abuses just palatable enough to go down.
    - s1artibartfast 4y ago
      I personally don't think that raising prices is abusive or even unethical. A tenant of voluntary labor and exchange is the ability to set your own price. Like you said, it is an inherently human choice. I would be curious to hear how you think economic interactions should work.

deleted 4y ago

[deleted]

starkd 4y ago

The increase cost of goods and service is not the cause of inflation, it is the definition of inflation. The cause is increased supply of money along with velocity of money.

acuozzo 4y ago
Would inflation occur if all companies decided to act together patriotically and not increase what they're charging in response to the increased money supply? > it is the definition of inflation Doesn't the definition of inflation have more to do with the decreased value of currency? There are plenty of uses for currency outside of the purchase of goods and services.
- s1artibartfast 4y ago
  Yes. If buyers have cash piling up and companies magically decided to hold prices, the cash would just flow into whatever could be still be bought, probably housing. In reality, the only thing that puts downward pressure on prices is if people cant afford them.
  - acuozzo 4y ago
    > the cash would just flow into whatever could be still be bought, probably housing How would this decrease the value of the currency? It would certainly reduce asset availability, but— to use your example —there's an absurd surplus of housing nationwide.
    - s1artibartfast 4y ago
      housing is one factor in tracking the value of a currency. Assume we freeze the prices of consumer goods, cost of housing still figures into your budget and cost of living. >It would certainly reduce asset availability, but— to use your example —there's an absurd surplus of housing nationwide. I cant relate to this idea of an absurd housing surplus. It simply doesn't match m understanding of reality. Housing prices have gone through the roof almost everywhere people want to live.