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Missing Inflation.
#41
- The Abbess
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Posted 2007-November-16, 18:01
lol, Mike
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#42
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Posted 2007-November-16, 21:02
Josh, it is even worse than that - there are many different defintions of what constitutes inflation. Some say it is strictly increase in money stosck, thus debasing the value of each bill. Others say it is money supply + debt increases.
Still others look at price measurements.
I think the best definition is simply a debasement of money, whatever the cause; price increases are not inflation but the response to inflation. You can have price increases and decreases occuring at the same time in different values, i.e., corn higher, computers lower. However, you cannot have inflation and deflation occuring at the same time - that is why, IMO, it is senseless to look at any "basket of goods" to measure inflation - all you are seeing is price movements, and that may or may not be inflation.
I think the money stock + debt is the correct definition, because debt is required to establish money.
Still others look at price measurements.
I think the best definition is simply a debasement of money, whatever the cause; price increases are not inflation but the response to inflation. You can have price increases and decreases occuring at the same time in different values, i.e., corn higher, computers lower. However, you cannot have inflation and deflation occuring at the same time - that is why, IMO, it is senseless to look at any "basket of goods" to measure inflation - all you are seeing is price movements, and that may or may not be inflation.
I think the money stock + debt is the correct definition, because debt is required to establish money.
"Injustice anywhere is a threat to justice everywhere."
#43
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Posted 2007-November-17, 09:43
We can relate all aspects of the economical impact of currency into value for money in terms of how much work you have to do to purchase goods or services.
I mail a letter (yes people still do that) and it costs me $1. That cost me 5 min of my workday to send it. When it cost $0.05 (yes I am that old) and I was earning $2 per hour, effectively, the 5 cent letter was half as expensive as the dollar one. The value of the stamp has been reduced by half. Inflation has eroded its value by 50%. So over the intervening years, did the speed of delivery increase by twice? (Or some other tangible benefit that accrues to the intrinsic value of the good or service.)
Look to the things you buy with the money you earn. That is its only real value. THis is why, as lower paying, service type jobs become the norm, the economy lags. More work hours to buy the same things. In economies where the pay rates are increasing, value for money is assured.
I mail a letter (yes people still do that) and it costs me $1. That cost me 5 min of my workday to send it. When it cost $0.05 (yes I am that old) and I was earning $2 per hour, effectively, the 5 cent letter was half as expensive as the dollar one. The value of the stamp has been reduced by half. Inflation has eroded its value by 50%. So over the intervening years, did the speed of delivery increase by twice? (Or some other tangible benefit that accrues to the intrinsic value of the good or service.)
Look to the things you buy with the money you earn. That is its only real value. THis is why, as lower paying, service type jobs become the norm, the economy lags. More work hours to buy the same things. In economies where the pay rates are increasing, value for money is assured.
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#44
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Posted 2008-April-10, 14:53
Relating to this thread and the more recent "A Discussion of Modern Inflation Causes" thread, the latest issue of Fortune has this article:
The great inflation cover-up
The great inflation cover-up
'I hit my peak at seven' Taylor Swift