2 ms·

I am sorry, but you are wrong, since about the 1960s. Inflation could be caused by money supply, sure. But don't take it from me: https://www.imf.org/en/Publ

I am sorry, but you are wrong, since about the 1960s. Inflation could be caused by money supply, sure. But don't take it from me: https://www.imf.org/en/Publications/fandd/issues/Series/Back-to-Basics/Inflation https://www.imf.org/en/Publications/fandd/issues/Series/Back... https://www.investopedia.com/terms/i/inflation.asp https://www.investopedia.com/terms/i/inflation.asp https://en.wikipedia.org/wiki/Inflation https://en.wikipedia.org/wiki/Inflation https://www.mckinsey.com/featured-insights/mckinsey-explainers/what-is-inflation https://www.mckinsey.com/featured-insights/mckinsey-explaine... https://www.dol.gov/general/topic/statistics/inflation https://www.dol.gov/general/topic/statistics/inflation https://gisme.georgetown.edu/news/what-the-hell-is-inflation-anyway/ https://gisme.georgetown.edu/news/what-the-hell-is-inflation... (Inflation used to mean what you claim it means...but doesn't anymore) https://www.econlib.org/library/Topics/HighSchool/Inflation.html https://www.econlib.org/library/Topics/HighSchool/Inflation.... https://www.bankofengland.co.uk/explainers/what-is-inflation https://www.bankofengland.co.uk/explainers/what-is-inflation https://www.rba.gov.au/education/resources/explainers/inflation-and-its-measurement.html https://www.rba.gov.au/education/resources/explainers/inflat... https://www.axios.com/2024/05/26/inflation-definition-evolution-high-prices https://www.axios.com/2024/05/26/inflation-definition-evolut... (There is some argument that I may too be wrong, and inflation is coming to mean high prices, but when the DNC campaign was talking about low inflation, it was not referring to prices, but change in prices.)

_heimdall 2y ago
My point wasn't that the term is used this way, its that the definition of inflation has always been an increase in money supply. The common use of the term to mean a change in prices is a useless definition. Its extremely common to hear "inflation" used to describe price changes, but the number is then used in isolation. Prices change for countless reasons and without detailed context related to supply/demand, strength of the dollar, etc you have NP idea why prices changed. Maybe we printed trillions and prices went up because the supply of money went up Maybe prices increased because demand is outpacing supply. The response to those situations and economic sentiment should be wildly different, but the inflation number may be exactly the same.
- wasabi991011 2y ago
  > its that the definition of inflation has always been an increase in money supply Can you provide a single source for this? I'm looking at textbooks from 25 years ago (Macroeconomics by Doepke Lehnert Sellgren) and they also contradict you. How far back are we supposed to look for your definition?
  - _heimdall 2y ago
    https://www.clevelandfed.org/publications/economic-commentary/1997/ec-19971015-on-the-origin-and-evolution-of-the-word-inflation https://www.clevelandfed.org/publications/economic-commentar... Heres a good source I just found as so many were looking for sources here. I believe it was around the 1960s or 1970s when most economists started using "inflation" to mean price increases. The history there is pretty fascinating, it was basically a reaction by modern monetary theorists who really had to redefine it for their economic system to make sense. A core goal in MMT is to have a fiat currency and controls in place to let you manipulate the money supply quickly in an attempt to move the economy in one direction or another. With the original definition, inflation is actually the tool used by MMT rather than an indicator of economic health.
    - shkkmo 2y ago
      That history also pretty clearly explains the shift. The argument pretty quickly shifted to being based on the effects. Debtors favored currency supply inflation because it increased prices and thus decreased. Lenders favored the opposite. Since most of the people arguing about the term care about a specific class of effect, the term grew to encompass that type of effect. As our understanding of the cause of that effect grew, the term shifted to primarily meaning the effect. This all makes complete sense since most people don't care about the cause in itself but about how prices are changing.
      - _heimdall 2y ago
        > This all makes complete sense since most people don't care about the cause in itself but about how prices are changing. I would hope that isn't true, an economy would function horribly if we only cared about the price change percentage and didn't care why it happened. If prices went up because most people had more money to spend you should act much differently than if prices went up because supply collapsed, for example.

_heimdall 2y ago

My point wasn't that the term is used this way, its that the definition of inflation has always been an increase in money supply. The common use of the term to mean a change in prices is a useless definition. Its extremely common to hear "inflation" used to describe price changes, but the number is then used in isolation. Prices change for countless reasons and without detailed context related to supply/demand, strength of the dollar, etc you have NP idea why prices changed. Maybe we printed trillions and prices went up because the supply of money went up Maybe prices increased because demand is outpacing supply. The response to those situations and economic sentiment should be wildly different, but the inflation number may be exactly the same.

wasabi991011 2y ago
> its that the definition of inflation has always been an increase in money supply Can you provide a single source for this? I'm looking at textbooks from 25 years ago (Macroeconomics by Doepke Lehnert Sellgren) and they also contradict you. How far back are we supposed to look for your definition?
- _heimdall 2y ago
  https://www.clevelandfed.org/publications/economic-commentary/1997/ec-19971015-on-the-origin-and-evolution-of-the-word-inflation https://www.clevelandfed.org/publications/economic-commentar... Heres a good source I just found as so many were looking for sources here. I believe it was around the 1960s or 1970s when most economists started using "inflation" to mean price increases. The history there is pretty fascinating, it was basically a reaction by modern monetary theorists who really had to redefine it for their economic system to make sense. A core goal in MMT is to have a fiat currency and controls in place to let you manipulate the money supply quickly in an attempt to move the economy in one direction or another. With the original definition, inflation is actually the tool used by MMT rather than an indicator of economic health.
  - shkkmo 2y ago
    That history also pretty clearly explains the shift. The argument pretty quickly shifted to being based on the effects. Debtors favored currency supply inflation because it increased prices and thus decreased. Lenders favored the opposite. Since most of the people arguing about the term care about a specific class of effect, the term grew to encompass that type of effect. As our understanding of the cause of that effect grew, the term shifted to primarily meaning the effect. This all makes complete sense since most people don't care about the cause in itself but about how prices are changing.
    - _heimdall 2y ago
      > This all makes complete sense since most people don't care about the cause in itself but about how prices are changing. I would hope that isn't true, an economy would function horribly if we only cared about the price change percentage and didn't care why it happened. If prices went up because most people had more money to spend you should act much differently than if prices went up because supply collapsed, for example.