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Yeah nah, there’s that alt economics we were talking about. There are multiple causes, money supply is only one of the factors at play. Using your fire example

by Nursie 4y ago

Yeah nah, there’s that alt economics we were talking about. There are multiple causes, money supply is only one of the factors at play. Using your fire example, there are three factors, miss any one of them, no fire. Choosing then to blame a single factor is … well it’s just wrong. And that’s if we grant your fire analogy as valid in the first place. Regardless of the above - conflating monetary supply inflation with general inflation is a favourite meme among the Austrians, they aren’t the same thing. Austrian economics (usually beloved of libertarians) is an idealogical, rather than descriptive, school of thought.

refurb 4y ago
Ok, please suggest how else you can get inflation (sustained, across the board price increases, i.e. devaluation of money) without an increase in money supply (either through new money or increased debt). You claim its wrong but offered no explanation.
- Nursie 4y ago
  In the abstract, sustained demand but with a drop in supply of goods, will produce price inflation with no particular need to change the money supply. This is what we have seen with (for example) gas and oil in the wake of the russia-ukraine conflict. I claim, as I have always claimed, that monetary supply is only a single variable in the calculation, not the be-all and end-all. The idea that it is the only factor (not the only important factor but the only factor) is a tenet of the religious pseudo-economics of the "Austrian School". Not that economics is the most rigorous of sciences in the first place, but Austrian economics is more akin to a moral code and set of beliefs.
  - refurb 4y ago
    In the abstract, sustained demand but with a drop in supply of goods, will produce price inflation with no particular need to change the money supply. Thats not inflation in the sense that economists care about inflation, that’s a price change due to supply and demand, and a subsequent impact on cost inputs dependent on it. Housing is a good example. Supply takes time and if demand goes up, prices rise, but thats not inflation. If the only factory producing widgets blows up and the price goes up (and the price of everything else dependent on it) the value of the currency isn't eroded at all. As proven by the fact that the cost of goods unrelated to widgets is unchanged. Its funny you call monetary theory “pseudo-economics”, yet dont seem to understand some of the basics of economics yourself.
    - Nursie 4y ago
      > If the only factory producing widgets blows up and the price goes up (and the price of everything else dependent on it) the value of the currency isn't eroded at all. As proven by the fact that the cost of goods unrelated to widgets is unchanged. But if it happens across an economy due to, for instance, a rise in the input costs of fossil fuel which plays out across multiple sectors, this can push prices up across the board without needing the money supply to change at all. > Its funny you call monetary theory “pseudo-economics” I did nothing of the sort, monetary theory and Austrian economics are not synonymous. Once again, money supply is not the only factor in inflation, this is a very mainstream economic view.
      - refurb 4y ago
        Yes, prices can rise broadly due to oil prices rising, but they come back down when oil prices drop. And the price rise isn't because the currency is less valuable, so its not the type of inflation that concerns economists - the kind that drives consumers to spend rather than save or invest. Just like the converse - if energy costs dropped due some new technology, it’s not deflationary (each dollar is worth more than before).
        Nursie 4y ago
        > And the price rise isn't because the currency is less valuable > Just like the converse - if energy costs dropped due some new technology, it’s not deflationary (each dollar is worth more than before). If the price of everything rises or falls, the currency is more or less valuable when compared to goods, and this is a type of inflation which affects consumer behaviour, particularly if that rise is sustained. Inflation in many countries is measured against some sort of 'basket of goods' that are (in theory) chosen to reflect costs that affect everyday life. I'm not trying to dismiss money supply as a factor, clearly it's a huge factor, particularly over the longer term.

by Nursie 4y ago

refurb 4y ago

Ok, please suggest how else you can get inflation (sustained, across the board price increases, i.e. devaluation of money) without an increase in money supply (either through new money or increased debt). You claim its wrong but offered no explanation.

Nursie 4y ago
In the abstract, sustained demand but with a drop in supply of goods, will produce price inflation with no particular need to change the money supply. This is what we have seen with (for example) gas and oil in the wake of the russia-ukraine conflict. I claim, as I have always claimed, that monetary supply is only a single variable in the calculation, not the be-all and end-all. The idea that it is the only factor (not the only important factor but the only factor) is a tenet of the religious pseudo-economics of the "Austrian School". Not that economics is the most rigorous of sciences in the first place, but Austrian economics is more akin to a moral code and set of beliefs.
- refurb 4y ago
  In the abstract, sustained demand but with a drop in supply of goods, will produce price inflation with no particular need to change the money supply. Thats not inflation in the sense that economists care about inflation, that’s a price change due to supply and demand, and a subsequent impact on cost inputs dependent on it. Housing is a good example. Supply takes time and if demand goes up, prices rise, but thats not inflation. If the only factory producing widgets blows up and the price goes up (and the price of everything else dependent on it) the value of the currency isn't eroded at all. As proven by the fact that the cost of goods unrelated to widgets is unchanged. Its funny you call monetary theory “pseudo-economics”, yet dont seem to understand some of the basics of economics yourself.
  - Nursie 4y ago
    > If the only factory producing widgets blows up and the price goes up (and the price of everything else dependent on it) the value of the currency isn't eroded at all. As proven by the fact that the cost of goods unrelated to widgets is unchanged. But if it happens across an economy due to, for instance, a rise in the input costs of fossil fuel which plays out across multiple sectors, this can push prices up across the board without needing the money supply to change at all. > Its funny you call monetary theory “pseudo-economics” I did nothing of the sort, monetary theory and Austrian economics are not synonymous. Once again, money supply is not the only factor in inflation, this is a very mainstream economic view.
    - refurb 4y ago
      Yes, prices can rise broadly due to oil prices rising, but they come back down when oil prices drop. And the price rise isn't because the currency is less valuable, so its not the type of inflation that concerns economists - the kind that drives consumers to spend rather than save or invest. Just like the converse - if energy costs dropped due some new technology, it’s not deflationary (each dollar is worth more than before).
      - Nursie 4y ago
        > And the price rise isn't because the currency is less valuable > Just like the converse - if energy costs dropped due some new technology, it’s not deflationary (each dollar is worth more than before). If the price of everything rises or falls, the currency is more or less valuable when compared to goods, and this is a type of inflation which affects consumer behaviour, particularly if that rise is sustained. Inflation in many countries is measured against some sort of 'basket of goods' that are (in theory) chosen to reflect costs that affect everyday life. I'm not trying to dismiss money supply as a factor, clearly it's a huge factor, particularly over the longer term.