Posted on 01/16/2013 10:48:17 AM PST by arthurus
The basic notion that more money, i.e., inflation, causes higher prices, i.e., price inflation, is not a uniquely Austrian view. It is a very old and commonly held view by professional economists and is presented in nearly every textbook that I have examined.
This common view is often labeled the quantity theory of money. Only economists with a Mercantilist or Keynesian ideology even challenge this view. However, only Austrians can explain the current dilemma: why hasn't the massive money printing by the central banks of the world resulted in higher prices.
(Excerpt) Read more at rightsidenews.com ...
Because REAL unemployment is closer to 16%, so many people are struggling, there isn’t much demand to put pressure on prices.
That is correct. Real statistics on the economies are NOT being published. Real employment in the U.S. without a specialized education is abysmal. A 5-gallon gas can at Wal-Mart priced out at $16 dollars yesterday. That’s a bit high for a piece of plastic, don’t you think?
If you haven’t seen the inflation, you obviously haven’t been out. Food, gas, new automobiles, toys, and services have all pretty much doubled in 10 years.
The Fed is gobbling up government debt with Monopoly money. This is the same thing they did after WWII in the 1950’s and early 1960’s. Eventually the scheme collapsed and we got the inflation in the 1970’s.
If I recall my econ correctly (30 year old memory here...)
M*V = P*Q
M = Money Supply
V = Velocity of Money (Re-use of the same dollar by many people through the banking system)
P = Price Level (An increasing one is “Inflation”)
Q = Quantity of Goods
So, it is entirely possible that the printing of money (+M) is completely offset by the reduction in the velocity of money(V-) because banks won’t lend.
That’s my theory. If banks actually started to lend at historic rates, inflation would ramp to unheard of levels.
But what bank is going to be willing to lend for a house? What person can qualify for a loan to buy a house? What business is willing to take risks so that they ask a bank for a loan? So, money stays on the sidelines, waiting for a better economic policy environment.
0bamanomics is killing us, but keeping inflation under control by disallowing growth.
They should not say Austrian, but Austrian economists. Austrian economists have a Libertarian/Anarchist political agenda.
Where isn’t it? I just paid close to $9 for two halogen bulbs to replace the two that burned out on a work light I paid less than $20 for a year ago. Go buy a can of WD-40. The only I haven’t really noticed much of increase in is a case of beer; necessities being what they are.
This clown hasn’t been to the grocery store or gas station lately. Pay more, get less. Look at the unit volume you get for what you pay for. Everything costs more now per pound/ounce/gallon. The one thing that should be tracked for inflation (ie: food, staples, fuel) is not included in the inflation index. You can’t eat durable goods, so why do they use those as an index for inflation? Because they need to hide the fact that OUR dollars can buy only so much food, at the expense of buying cheap junk from china, which you cannot eat without dying.
We are still regressing the economy so deflation continues until bottom. Then, hyperinflation. Manufacturers are selling off warehouse stocks and manufacturing to try to stay in business. Some manufacturers still producing necessary goods but finding pressure on prices. People are simply comparative shopping to the max and stocking up on deals.
Next time you go to the grocery store, look at the packages. You’re paying the same price for less stuff.
But growth in Q by the equation M*V = P*Q would lower inflation.
They have no “agenda.” They astutely describe what happens in the real world.
If you buy food, fuel, education and insurance inflation is huge.
That was specified in the first sentence of the original article, but the excerpt here jumped past the intro and into the meat of the article (which is usually helpful - far too many FR excerpts show the intro but not the main point)
Response: Three New York steaks at a Los Angeles County COSTCO were priced at $51.00.
The reported CPI averaged 218.056 in December 2010 and averaged 224.939 2012.
I just bought a jug of Clorox - 3 quarts, not a gallon anymore.
You don’t have to be an Austrian to realize that the printing was offset by a massive credit squeeze.
The reduction in credit reduced the money supply. The printing increased it. They offset.
Indeed, money has to MOVE in order for there to be across the board inflation.
However, food prices are going up, package sizes getting smaller, etc.
Time to “grow your own”.
Both "core" (excluding fuel and food) and total CPI figures are published every month. Now which one the press chooses to report depends on their ideology, but the BLS isn't hiding food and fuel.
Now whether their CPI calculations reflect reality is certainly open to to doubt and discussion.
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