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Very understated, so probably driven from government deliberate statistical/interpretational manipulations. Also: inflation is NOT fundamentally about price ch

Very understated, so probably driven from government deliberate statistical/interpretational manipulations. Also: inflation is NOT fundamentally about price changes. Inflation is purely the result of arbitrary expansion of government fiat money supply. A simple example drives this home. One could say that a $1,000 computer of say 10 years ago was much less powerful than a $900 computer of today, and be right. One could say that inflation hasn't affected computers, and they would be wrong. Without the expansion of fiat money, that $900 computer would be, say, $500 or less. The final price is not how inflation can or should be measured.

deleted 3y ago
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whoomp12342 3y ago
another good example is cars. in 2000, you got heat, ac, and maybe a casset player. Now look at all the gizmos and gadgets on them
- doubled112 3y ago
  I would rather most of the gizmos and gadgets go away, and I can't be alone. Laws and manufacturers have decided for me though. No fighting it now.
- o11c 3y ago
  IME none of those modern gizmos and gadgets are actually useful. But "intermittent windshield wipers" should not be an optional feature, Toyota!
  - deleted 3y ago
    [deleted]
  - andruby 3y ago
    Some of the gizmos were useful in my opinion: Central locking, power windows, navigation (before our phones did it), power steering. Lots of engine efficiencies reduced fuel usage.
zamadatix 3y ago
This view is known as (or extremely closely aligned with) Monetarism, originally championed by Friedman. It was very popular at the time but when the velocity of money became more volatile in the following decades the assertion that the growth of the money supply is the only factor in inflation did not seem to hold which cast severe doubts on these types of claims, despite the simplicity of the argument. I.e. that other methods of measuring inflation try to capture the advances in technology for a basket of goods is something done intentionally and not in error (or maliciously... by the majority of economists at least). Capturing this accurately is very difficult since quality can change, the basket of goods that makes sense to measure itself can change (what's a computer?), consumer behaviour can change, and so on. I don't think anyone has a perfect model but "ignore it all, just look at the money supply" didn't turn out to be a great model either. At the same time, in my understanding of most models (including the basket of goods CPI approach), monetary supply remains a key influence on the changes found in measurement.
- throw0101c 3y ago
  > This view is known as (or extremely closely aligned with) Monetarism, originally championed by Friedman. And even Friedman recanted this view in an interview: (Financial Times (UK), June 7, 2003): > The use of quantity of money as a target has not been a success. I'm not sure that I would as of today push it as hard as I once did. During the 1980s, the heyday of right-leaning economic thought, not even Reagan and Thatcher (or Volcker) bothered with money supply during in the high-inflation days: see the book Samuelson Friedman: the battle over the free market by Wapshott for a good history.
throw0101c 3y ago
> Also: inflation is NOT fundamentally about price changes. Inflation is purely the result of arbitrary expansion of government fiat money supply. What's more important is what the money is doing; having just a pile of money tells you nothing. Cullen Roche has a good explanation: > But also – why do so many people insist that inflation is an increase in the money supply? This makes zero sense. Here’s why – our economy is mostly a credit based economy. So, if I take out a loan for $100,000 then the money supply has technically increased by $100,000. But what if I don’t actually tap that loan? What if I borrow the money because, for instance, house prices just went up 25% and I want to have some cash around for emergencies? This doesn’t tell us anything about prices, living standards or really anything. But this is what so much of the money supply represents – money that has been issued and is just sitting around unused. Why is this useful? It’s like calculating your weight changes by counting how much food you have in your refrigerator. No. That’s potential calories consumed and potential weight gain. The amount of food in your fridge tells you little about your future weight changes just like the amount of money in the economy tells us little about the actual price changes in the economy. * https://www.pragcap.com/three-things-i-think-i-think-i-see-dead-mutual-funds/ https://www.pragcap.com/three-things-i-think-i-think-i-see-d... Japan's money supply has constantly gone up over the last few decades and it has seen deflation more than once during the same time period: * https://fred.stlouisfed.org/graph/?g=1680i https://fred.stlouisfed.org/graph/?g=1680i
- deleted 3y ago
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whoomp12342 3y ago

another good example is cars. in 2000, you got heat, ac, and maybe a casset player. Now look at all the gizmos and gadgets on them

doubled112 3y ago
I would rather most of the gizmos and gadgets go away, and I can't be alone. Laws and manufacturers have decided for me though. No fighting it now.
o11c 3y ago
IME none of those modern gizmos and gadgets are actually useful. But "intermittent windshield wipers" should not be an optional feature, Toyota!
- deleted 3y ago
  [deleted]
- andruby 3y ago
  Some of the gizmos were useful in my opinion: Central locking, power windows, navigation (before our phones did it), power steering. Lots of engine efficiencies reduced fuel usage.

zamadatix 3y ago

This view is known as (or extremely closely aligned with) Monetarism, originally championed by Friedman. It was very popular at the time but when the velocity of money became more volatile in the following decades the assertion that the growth of the money supply is the only factor in inflation did not seem to hold which cast severe doubts on these types of claims, despite the simplicity of the argument. I.e. that other methods of measuring inflation try to capture the advances in technology for a basket of goods is something done intentionally and not in error (or maliciously... by the majority of economists at least). Capturing this accurately is very difficult since quality can change, the basket of goods that makes sense to measure itself can change (what's a computer?), consumer behaviour can change, and so on. I don't think anyone has a perfect model but "ignore it all, just look at the money supply" didn't turn out to be a great model either. At the same time, in my understanding of most models (including the basket of goods CPI approach), monetary supply remains a key influence on the changes found in measurement.

throw0101c 3y ago
> This view is known as (or extremely closely aligned with) Monetarism, originally championed by Friedman. And even Friedman recanted this view in an interview: (Financial Times (UK), June 7, 2003): > The use of quantity of money as a target has not been a success. I'm not sure that I would as of today push it as hard as I once did. During the 1980s, the heyday of right-leaning economic thought, not even Reagan and Thatcher (or Volcker) bothered with money supply during in the high-inflation days: see the book Samuelson Friedman: the battle over the free market by Wapshott for a good history.

throw0101c 3y ago

> Also: inflation is NOT fundamentally about price changes. Inflation is purely the result of arbitrary expansion of government fiat money supply. What's more important is what the money is doing; having just a pile of money tells you nothing. Cullen Roche has a good explanation: > But also – why do so many people insist that inflation is an increase in the money supply? This makes zero sense. Here’s why – our economy is mostly a credit based economy. So, if I take out a loan for $100,000 then the money supply has technically increased by $100,000. But what if I don’t actually tap that loan? What if I borrow the money because, for instance, house prices just went up 25% and I want to have some cash around for emergencies? This doesn’t tell us anything about prices, living standards or really anything. But this is what so much of the money supply represents – money that has been issued and is just sitting around unused. Why is this useful? It’s like calculating your weight changes by counting how much food you have in your refrigerator. No. That’s potential calories consumed and potential weight gain. The amount of food in your fridge tells you little about your future weight changes just like the amount of money in the economy tells us little about the actual price changes in the economy. * https://www.pragcap.com/three-things-i-think-i-think-i-see-dead-mutual-funds/ https://www.pragcap.com/three-things-i-think-i-think-i-see-d... Japan's money supply has constantly gone up over the last few decades and it has seen deflation more than once during the same time period: * https://fred.stlouisfed.org/graph/?g=1680i https://fred.stlouisfed.org/graph/?g=1680i

deleted 3y ago
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