And something that seems to escape almost every liberal when it comes to economics.
The ignorancy of the left where they credit everything but monetary policy (i.e. wal mart, billy joe bob with one glass eye, oil companies, etc) with inflation or undercutting it annoys me to no end.
One price or several prices rising is not inflation.A good read.Increases in money supply are what constitute inflation, and a general rise in prices is the symptom
And something that seems to escape almost every liberal when it comes to economics.
I'm not sure you could get many Freepers to acknowledge the bolded statements of fact. Heck, look at how many Freepers support the "Fair Tax" and you can see that the level of understanding of economics isn't high here.
I thought inflation was when the money suppy increased faster than the GDP. Increasing prices do not cause inflation, inflation causes increasing prices.
The prices of all commodities go up in times of inflation. This includes labor. Now, those wage increases seem initially like a good thing, right? Of course not. First of all, employees are only making about as much as they were before because inflation is eating away at their purchasing power. Second, the savings that they have stored up are also losing their potency (savers are creditors, after all). Third, the increased dollar-amount income (albeit with little or no corresponding increase in purchasing power) bumps people into higher tax brackets than they would otherwise be in, thus causing them to pay a greater portion in taxes than they otherwise would, thus reducing the purchasing power of their paycheck as a whole, not just of each individual dollar.
So beware a raise in times of inflation; you could just be sprinting forward to stay right where you are.
Same thing: discovery and development of new deposits of precious metals [be it Cortez/Pisarro in 16th century or Alaskan and SA gold around 1900] was inflationary. Yes, to find a juicy gold deposit is a bit harder than revving up a printing press, but still eminently possible.
Actually liberals count on it. So do some conservatives. Governments historically have run up great debts and then defaulted by means of inflation. President Bush is doing it now, big time.
That's true by definition, but in practice inflation doesn't show up everywhere at once. Ultimately inflation is the same thing as currency devaluation, therefore one would look to something like the dollar index (a measure of the dollar against major currencies) as an early indicator. Another place to look is commodities. The Bush dollar was made weak by Greenspan keeping interest rates well below market levels (reckless government growth has also helped). The dollar index has reflected the devaluation of the dollar and has shown up in commodities, especially oil and housing prices are linked to the low interest rates that were used to weaken the dollar.
By the time inflation shows up in the general price level it's already been known for quite some time by people who follow market indicators.
This is how we're sticking it to the ChiComs foolish enough to buy our national debt.
Money can be viewed as a country's stock.
It I print more money (issue more stock) than there is value in the underlying (company) country, I devalue the existing money (or dilute the existing stock).
As the existing money is devalued, it takes more of it to buy the same thing.
If the country's "value" goes backwards quickly, you get what will be referred to as hyper inflation.
In a country with money backed by a limited quantity of a thing of value, like gold for example, the money would actually increase in purchasing power as time went on. The price of things would go down in dollar terms.
But it is not possible to have that kind of system and to steal from the common man at the same time.
So our countries money is based on what, good faith?? Yes and nothing more.
Wasn't there a huge increase in the money supply in '99-'00 and, if my memory is correct, why wasn't there a corresponding inflationary reaction?
Granted productivity did go up, but I recall the increase in the money supply to be fairly significant.
Appreciate any clarification.
LOL!
Like "normalcy"?
LOL again.
In an interesting development, the Fed has decided that the amount of new M3 money doesn't matter any more, and so they are no longer going to provide statistics on new M3.
Icebergs ahead? Turn off the radar--at least the one in the passengers' lounge.
"What's inflation?"
John Kerry's opinions of himself.
Inflation is what you get when you elect an idiot president. Oh....say.....someone like Jimmy Carter.
What does our Constitution say about money? Remember, our FF knew all about deflation, hyperinflation, fiat currency etc. They had just lived through it!
Section. 8. Clause 2: To borrow Money on the credit of the United States;
Clause 5: To coin Money, regulate the Value thereof, and of foreign Coin, and fix the Standard of Weights and Measures;
Section. 10. Clause 1: No State shall ... coin Money; emit Bills of Credit; make any Thing but gold and silver Coin a Tender in Payment of Debts;
This country is propelled by debt, expansion and inflation. Stop any one of them and the Great Depression will look like a cakewalk.
Good stuff, simple and easy to read.
Inflation is what is going to ultimately shrink the national debt, again.
"When inflation is unanticipated, as it so often is, there's a redistribution of wealth from creditors to debtors" . . .
Nonsense.
Look at all the 'real estate millionaires.' Just look at them, basking in their self-reflected glory. NOT! Real estate has been hyper-inflated approximately 20% + per year for the past four years. It has been inflated by the Fed easy money lending policies. This is all smoke and mirrors and is a house of cards. It is all hype and B.S. Real estate used like an ATM machine is not real wealth.
Example: Shoe box sized houses in La La Land drug town selling for over $ 600,000? Get real. It's all B.S. people. Los Angeles County increases its property taxes accordingly. Piling more B.S. on top of B.S. Portland, Oregon is hyper-inflating at about 25% + a year for the past three years. Drug houses only sell for $ 250,000 here. Wake up, people. This entire economy is smoke and mirrors. Just like Wal-Mart represents a 'vital U.S. economy.' LOL, LOL, LOL! That one company represents China getting richer while America is losing more jobs every day. (Learn More?)
There has been no "redistribution of wealth from creditors to debtors." No way! The redistribution never happened. Not really. When the real estate bubble bursts, these debtors will still owe the money to lenders. Even after they have lost their homes to foreclosure, debtors will pay, and pay, and pay for years. Under the new Bankruptcy Act, lenders win and debtors lose. Thank your corrupt Congress who accepted bribes from lenders to change the law. And thank "Mr. Bubbles" himself, Alan Greenspan.
Comparing prices in gold in U.S. of 1833 with 1933, just prior to the abandoning of the domestic gold standard, the index of wholesale commodity prices increased only of 0.9 percent in one hundred years. Since then the index increased 350% by 1971 when president Nixon announced that no more gold would be given in exchange for dollars. In the last twenty years ('03) the index has gone up around 400%.