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What a wonderful success the Federal Reserve redefinition of "inflation" has been. We will never get anywhere if everything that causes price increases is call

What a wonderful success the Federal Reserve redefinition of "inflation" has been. We will never get anywhere if everything that causes price increases is called inflation. Inflation is an increase in the money supply which also happens to increases prices. Everything has trade offs. Diluting the dollar increases prices for nothing in return. Pretty much all downside for everybody but the top. Tariffs increase prices to the benefit of domestic producers and benefits everybody. What we will see is if prices are more important than building skills and wealth of our fellow citizens.

kergonath 1y ago
> Tariffs increase prices to the benefit of domestic producers and benefits everybody. Not necessarily, and there are plenty of examples around the world of tariffs that do not do that, but instead cripple the economy. Tariffs are just one aspect. If the domestic supply is not there for one reason or another, you have the worst of both worlds, with high prices and still no re-industrialisation. You need companies to be reasonable confident that they’ll be making money next year, and you need the situation to be stable enough to let people invest to make it happen. You need those people to be confident enough that they won’t just be crushed by a president’s friend who has more access to power than they have. You need rule of law and due process. Not a kleptocratic oligarchy. Otherwise you’re just sawing off your leg to repair a broken ankle.
jaredklewis 1y ago
> Inflation is an increase in the money supply which also happens to increases prices. This is not a definition I have seen used by academic or working economists. If the purchasing power of $1 decreases, we can say there has been inflation. Even if the money supply is constant, if shirts used to cost $10 but now cost they cost $100 due to increased demand, a supply shock, a union strike, a tax, or a speculative shirt buying bubble, it would be considered inflation in all of those cases, regardless of the cause. It sounds like you mean monetary inflation, but the fed’s mandate is not to control monetary inflation (which would be a lot simpler) but to ensure stable prices. The mandate has no exception for non-monetary causes of price instability. Of course measuring how much a dollar can purchases is an enormously complex and subtle task that can be approached in many different ways. But the whole argument for tariffs is that foreign producers of goods are selling them so cheaply that American producers cannot compete. So if we increase the price of those foreign goods by adding a tax on it and shift some good consumption to more expensive American producers, that’s obviously going to reduce what a dollar can purchase.
analognoise 1y ago
> Tariffs increase prices to the benefit of domestic producers and benefits everybody. I think tariffs are a regressive tax brought on by the most economically illiterate administration in living memory. > What we will see is if prices are more important than building skills and wealth of our fellow citizens. So instead of it being on the shoulders of the “wealthy job creators” who definitely earned it all fair and square and should keep every penny, it’s now on the poor and the average citizen? These are just regressive policies that lead to outright social unrest , and a horrific distribution of wealth.
- jrs235 1y ago
  >I think tariffs are a regressive tax brought on by the most economically illiterate administration That's the kind interpretation. The maligned one is they are brought on by those who lust for power and control and realize those come from more wealth and tariffs increase wealth disparity, increasing their percentage of the whole higher even if the pie shrinks.
orwin 1y ago
> Inflation is an increase in the money supply If the money supply increase slower than production, you get deflation (temporary, as deflation stop investments, which slow production), so hopefully no one important use your definition of inflation.

kergonath 1y ago

> Tariffs increase prices to the benefit of domestic producers and benefits everybody. Not necessarily, and there are plenty of examples around the world of tariffs that do not do that, but instead cripple the economy. Tariffs are just one aspect. If the domestic supply is not there for one reason or another, you have the worst of both worlds, with high prices and still no re-industrialisation. You need companies to be reasonable confident that they’ll be making money next year, and you need the situation to be stable enough to let people invest to make it happen. You need those people to be confident enough that they won’t just be crushed by a president’s friend who has more access to power than they have. You need rule of law and due process. Not a kleptocratic oligarchy. Otherwise you’re just sawing off your leg to repair a broken ankle.

jaredklewis 1y ago

> Inflation is an increase in the money supply which also happens to increases prices. This is not a definition I have seen used by academic or working economists. If the purchasing power of $1 decreases, we can say there has been inflation. Even if the money supply is constant, if shirts used to cost $10 but now cost they cost $100 due to increased demand, a supply shock, a union strike, a tax, or a speculative shirt buying bubble, it would be considered inflation in all of those cases, regardless of the cause. It sounds like you mean monetary inflation, but the fed’s mandate is not to control monetary inflation (which would be a lot simpler) but to ensure stable prices. The mandate has no exception for non-monetary causes of price instability. Of course measuring how much a dollar can purchases is an enormously complex and subtle task that can be approached in many different ways. But the whole argument for tariffs is that foreign producers of goods are selling them so cheaply that American producers cannot compete. So if we increase the price of those foreign goods by adding a tax on it and shift some good consumption to more expensive American producers, that’s obviously going to reduce what a dollar can purchase.

analognoise 1y ago

> Tariffs increase prices to the benefit of domestic producers and benefits everybody. I think tariffs are a regressive tax brought on by the most economically illiterate administration in living memory. > What we will see is if prices are more important than building skills and wealth of our fellow citizens. So instead of it being on the shoulders of the “wealthy job creators” who definitely earned it all fair and square and should keep every penny, it’s now on the poor and the average citizen? These are just regressive policies that lead to outright social unrest , and a horrific distribution of wealth.

jrs235 1y ago
>I think tariffs are a regressive tax brought on by the most economically illiterate administration That's the kind interpretation. The maligned one is they are brought on by those who lust for power and control and realize those come from more wealth and tariffs increase wealth disparity, increasing their percentage of the whole higher even if the pie shrinks.

orwin 1y ago

> Inflation is an increase in the money supply If the money supply increase slower than production, you get deflation (temporary, as deflation stop investments, which slow production), so hopefully no one important use your definition of inflation.