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What is this nonsense? Inflation is always due to a lack of competition? Where on earth is the evidence for such an assertion (I didn't see anything in the lin

What is this nonsense? Inflation is always due to a lack of competition? Where on earth is the evidence for such an assertion (I didn't see anything in the linked article)? Inflation is a monetary phenomenon, it's not a mystery at all. Governments print too much money and then it's worth less. History is full of examples.

hgomersall 4y ago
Except that the evidence shows that money supply increase doesn't necessarily lead to inflation. Countries that go through hyperinflation always have a systematic underlying problem that they use money creation to try to fix. "Ah ha!" declare the monetarists, "evidence for our assertion that money supply is the cause of inflation", conveniently ignoring all the counter examples. The point of the GP post is that competition is how prices are reduced. There're buckets of economic theory that's at least as robust at the monetarist assertions that shows that prices drop when competition works properly. Every issue that underpins price rises is effectively a failure of competition. There are always winners from inflation: https://economicsfromthetopdown.com/2021/11/24/the-truth-about-inflation/ https://economicsfromthetopdown.com/2021/11/24/the-truth-abo...
- refurb 4y ago
  Thats a terrible article. The example of oranges going up in price and apples down is not inflation. Inflation is an overall erosion of buying power. When oil prices rise that’s not inflation, although prices might rise.
  - hgomersall 4y ago
    Apples and oranges were just an example to illustrate the problem with the CPI, which is what most people mean when they say "inflation", after which the US CPI is used extensively, including lots of historic data on variance. I can only conclude you didn't read the whole article or you're making a rhetorical point in lieu of an argument because the conclusions are uncomfortable. I actually agree that price rises like oil are not really inflation - what Keynes would call semi inflation. Regardless, oil price rises were not due to money supply and the subsequent monetary shenanigans are just economic theatre (and even that is being questioned at the inner sanctum: https://www.federalreserve.gov/econres/feds/files/2021062pap.pdf https://www.federalreserve.gov/econres/feds/files/2021062pap... )
  - imtringued 4y ago
    But we don't have neat measurements that differentiate between supply side and demand side inflation. Honestly the 70s inflation and the 20s inflation were both caused by the same thing, supply side price shocks in oil prices.
    - refurb 4y ago
      It’s not oil shocks because the timing doesnt work out. Like inflation this time started before the Ukraine War and run up in oil prices. Same in the 70’s, inflation had already doubled by 1970 but the oil shock didnt happen until 1973. You could argue it makes inflation worse, but it wasnt the cause.
      - kasey_junk 4y ago
        That implies there is a single factor that “causes” inflation. That’s not true. There are always inflationary and deflationary impacts on prices. Oil and boomers leaving the workforce and covid derailing shipping and monetary policy and 1000 other things can all be pushing up prices at the same time.
        refurb 4y ago
        But prices going up alone is not inflation. “Inflation is a general increase in prices and fall in the purchasing value of money.” The key is general. Increases in prices of select items due to supply or demand is not inflation.
        kasey_junk 4y ago
        All general means in that sentence is that the price increasing factors are more prevalent than the price decreasing ones. If there are several structural issues (eg greatest workforce change in 3 generations, war in Europe, worldwide pandemic, etc) they can all contribute to a general inflationary (or deflationary) trend. It’s a very particular economic school that says only monetary policy causes inflation. And we have years and years of loose policy that didn’t put inflation on the front burner for economists to argue about.
- landswipe 4y ago
  Australia's problem is inflated property prices, it's money being generated out of the air. This is a disaster for renters and is creating disparity. Boomers and older gen X are or will be cashed up to their eyeballs after offloading one or two investment properties, this has happened over the last few years.
  - vinyl7 4y ago
    I think it's going to be worse. Boomers think their house is worth million dollars today, but in 5-10 years when more of them start to retire, they will find out that a) millenials and younger can't afford their inflated prices and b) there are no other boomers to trade houses with. So if they rely on their house to be a retirement fund....that might not exist when they actually retire.

hgomersall 4y ago

Except that the evidence shows that money supply increase doesn't necessarily lead to inflation. Countries that go through hyperinflation always have a systematic underlying problem that they use money creation to try to fix. "Ah ha!" declare the monetarists, "evidence for our assertion that money supply is the cause of inflation", conveniently ignoring all the counter examples. The point of the GP post is that competition is how prices are reduced. There're buckets of economic theory that's at least as robust at the monetarist assertions that shows that prices drop when competition works properly. Every issue that underpins price rises is effectively a failure of competition. There are always winners from inflation: https://economicsfromthetopdown.com/2021/11/24/the-truth-about-inflation/ https://economicsfromthetopdown.com/2021/11/24/the-truth-abo...

refurb 4y ago
Thats a terrible article. The example of oranges going up in price and apples down is not inflation. Inflation is an overall erosion of buying power. When oil prices rise that’s not inflation, although prices might rise.
- hgomersall 4y ago
  Apples and oranges were just an example to illustrate the problem with the CPI, which is what most people mean when they say "inflation", after which the US CPI is used extensively, including lots of historic data on variance. I can only conclude you didn't read the whole article or you're making a rhetorical point in lieu of an argument because the conclusions are uncomfortable. I actually agree that price rises like oil are not really inflation - what Keynes would call semi inflation. Regardless, oil price rises were not due to money supply and the subsequent monetary shenanigans are just economic theatre (and even that is being questioned at the inner sanctum: https://www.federalreserve.gov/econres/feds/files/2021062pap.pdf https://www.federalreserve.gov/econres/feds/files/2021062pap... )
- imtringued 4y ago
  But we don't have neat measurements that differentiate between supply side and demand side inflation. Honestly the 70s inflation and the 20s inflation were both caused by the same thing, supply side price shocks in oil prices.
  - refurb 4y ago
    It’s not oil shocks because the timing doesnt work out. Like inflation this time started before the Ukraine War and run up in oil prices. Same in the 70’s, inflation had already doubled by 1970 but the oil shock didnt happen until 1973. You could argue it makes inflation worse, but it wasnt the cause.
    - kasey_junk 4y ago
      That implies there is a single factor that “causes” inflation. That’s not true. There are always inflationary and deflationary impacts on prices. Oil and boomers leaving the workforce and covid derailing shipping and monetary policy and 1000 other things can all be pushing up prices at the same time.
      - refurb 4y ago
        But prices going up alone is not inflation. “Inflation is a general increase in prices and fall in the purchasing value of money.” The key is general. Increases in prices of select items due to supply or demand is not inflation.
        kasey_junk 4y ago
        All general means in that sentence is that the price increasing factors are more prevalent than the price decreasing ones. If there are several structural issues (eg greatest workforce change in 3 generations, war in Europe, worldwide pandemic, etc) they can all contribute to a general inflationary (or deflationary) trend. It’s a very particular economic school that says only monetary policy causes inflation. And we have years and years of loose policy that didn’t put inflation on the front burner for economists to argue about.
landswipe 4y ago
Australia's problem is inflated property prices, it's money being generated out of the air. This is a disaster for renters and is creating disparity. Boomers and older gen X are or will be cashed up to their eyeballs after offloading one or two investment properties, this has happened over the last few years.
- vinyl7 4y ago
  I think it's going to be worse. Boomers think their house is worth million dollars today, but in 5-10 years when more of them start to retire, they will find out that a) millenials and younger can't afford their inflated prices and b) there are no other boomers to trade houses with. So if they rely on their house to be a retirement fund....that might not exist when they actually retire.