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Why would that be necessary? Increases in the price of fuel (or a variety of other things) impact the price of just about everything else, so why would that not

by DSMan195276 4y ago

Why would that be necessary? Increases in the price of fuel (or a variety of other things) impact the price of just about everything else, so why would that not qualify as a general price increase? Beyond that, the price of one commodity going up _does_ change the general price of things if you're using an average. I mean if you want to redefine inflation to simply be "how much the money supply has increased" then be my guest, but if that doesn't actually translate to how much more things cost then I don't see how useful that measure is. For the past year the money supply has been trending downward, so are you suggesting we didn't have any inflation last year?

WalterBright 4y ago
> so why would that not qualify as a general price increase? Because, unless there is a corresponding increase in the supply of money, the money spent on the oil isn't available to spend on other things. So those other things will experience a decline in prices, due to the inevitable Law of Supply & Demand.
- Georgelemental 4y ago
  Ah, but perhaps oil is a necessary component to manufacture many different things, so those other products will be forced to increase in lroce as well despite reduced demand.
- DSMan195276 4y ago
  I'm confused why you're ignoring the whole "supply" part of supply and demand. If companies can't afford to ship as much product, what happens to the supply? If businesses go bankrupt and disappear, what happens to the supply? I think there's a lot of caveats to the money supply argument, but even just from a pure supply/demand application you can have inflation if there's less goods to go around, without any change in money supply. That's also exactly what happens when you have situations such as increases in shipping costs and it becomes more expensive for businesses to operate. Again, did we inflation last year despite the money supply decreasing?

WalterBright 4y ago

> so why would that not qualify as a general price increase? Because, unless there is a corresponding increase in the supply of money, the money spent on the oil isn't available to spend on other things. So those other things will experience a decline in prices, due to the inevitable Law of Supply & Demand.

Georgelemental 4y ago
Ah, but perhaps oil is a necessary component to manufacture many different things, so those other products will be forced to increase in lroce as well despite reduced demand.
DSMan195276 4y ago
I'm confused why you're ignoring the whole "supply" part of supply and demand. If companies can't afford to ship as much product, what happens to the supply? If businesses go bankrupt and disappear, what happens to the supply? I think there's a lot of caveats to the money supply argument, but even just from a pure supply/demand application you can have inflation if there's less goods to go around, without any change in money supply. That's also exactly what happens when you have situations such as increases in shipping costs and it becomes more expensive for businesses to operate. Again, did we inflation last year despite the money supply decreasing?