4 ms·

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 o

by 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.
        refurb 4y ago
        All general means in that sentence is that the price increasing factors are more prevalent than the price decreasing ones. It doesn't. Inflation is an erosion of value of the currency. General means "across the board" because the currency is worth less. Sure, if there is a glut of apples and the price drops you may not notice the inflation baked into the price, but it's there. And if there is a shortage of oranges the price may jump higher than inflation, but that doesn't mean inflation is higher. People seem to be confusing general prices changes due to other factors with inflation. It's not inflation unless the currency is worth less.
        4y ago

by refurb 4y ago

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.
      - refurb 4y ago
        All general means in that sentence is that the price increasing factors are more prevalent than the price decreasing ones. It doesn't. Inflation is an erosion of value of the currency. General means "across the board" because the currency is worth less. Sure, if there is a glut of apples and the price drops you may not notice the inflation baked into the price, but it's there. And if there is a shortage of oranges the price may jump higher than inflation, but that doesn't mean inflation is higher. People seem to be confusing general prices changes due to other factors with inflation. It's not inflation unless the currency is worth less.
        4y ago