[cmeisenzahl]

This is the best explanation of it I've seen yet.

http://tinyurl.com/9lksb

[turtle777]

Uhm, stuff that costs $ 1.00 today will cost $ 1.05 next year. If that's true for most stuff, then you got inflation.

What's so freakin hard ?

-t

[SVass]

Inflation is how some women increase their bust size (and it is a conservative theory as to why greedy sellers increase their prices). sam

[OSX Abuser]

What you should look up and think about is what has been called 'Invisible inflation'
Simply said, the price remains the same but the product get smaller.
For example. Go down to your local grocery store and find the canned goods isle. Those cans of Corn, Peas and whatever, they used to be 16oz cans. They are now 14.5oz
Same with candy bars and such junk. The product has been reduced in size instead of raising the price.

[tooki]

Originally Posted by turtle777

Uhm, stuff that costs $ 1.00 today will cost $ 1.05 next year. If that's true for most stuff, then you got inflation.

What's so freakin hard ?

-t

The point was that the linked article explains how inflation happens. Everyone knows inflation's effects on prices.

tooki

[Sealobo]

The competition of spending creates inflation.

[turtle777]

Originally Posted by tooki

The point was that the linked article explains how inflation happens. Everyone knows inflation's effects on prices.

I agree, but the thread title is " What is inflation? ..."
Sort of misleading then...

-t

[SVass]

To get serious, Dr. Williams ignores increases in the availability of products. (I see his columns often in my local Republican biased newspaper.) He assumes that as in Monopoly, there is a fixed supply of goods. This is not true. Cars came along and replaced horses. Typewriters replaced pens and were in turn replaced by computers. Farmers, manufacturers, and people use tools to improve their productivity thus reducing the value of goods as long as there is a free market.

Bluntly put, fixing the supply of money stifles economic growth. Read Keynes. sam

[macroy]

a bit off topic... but I just realized how worthless one's education is if you don't use it. I have a B.S. in Economics. And while I can explain inflation, supply and demand (which anyone with common sense can as well), SVass's post struck a cord as I do remember who JM Keynes was.... but what were the two theories on economics? Classical and.....

Jesus... maybe I should give my degree back.

[turtle777]

Originally Posted by macroy

Jesus... maybe I should give my degree back.

I'll take it.

-t

[Big Mac]

Although I am a conservative, I find the referenced article to be rather poor. It only defines inflation in the most simplistic of senses, and it uses a hypothetical about counterfeiting that is hardly analogous to real economic conditions and which does not even strengthen his premise. The best simplistic definition of inflation is too much money chasing too few goods and services. His argument is that the Fed is to blame for inflation because it has monopolistic control over the monetary supply. He's got it backward, though. The Fed is a reactionary body that moves to constrain the monetary supply when inflation becomes an issue. The principle critique of the Fed is that it chokes off the economy too much over inflation fears. Furthermore, most economists credit the Fed for maintaining US economic stability.

The article also perpetuates the false perception that the printing of money is a cause of inflation. The fact is, paper currency accounts for a small fraction of the monetary supply. I also fault the article because it fails to identify the two types of inflation: demand pull and cost push. Often enough inflation is more or else out of control of the US government, when prices for essential goods such as oil rise to a significant degree and cause a general rise in prices throughout the economy - that's cost push inflation, and it's what occurred during the oil crisis of the 1970s. I do agree that outlawing the trading of precious metals was wrong and should be reconsidered. Yet, that article does not make its case very well.

Originally Posted by macroy

a bit off topic... but I just realized how worthless one's education is if you don't use it. I have a B.S. in Economics. And while I can explain inflation, supply and demand (which anyone with common sense can as well), SVass's post struck a cord as I do remember who JM Keynes was.... but what were the two theories on economics? Classical and.....

Jesus... maybe I should give my degree back.

Classical and Keynesian?

[turtle777]

Originally Posted by Big Mac

Although I am a conservative, I find the referenced article to be rather poor. It only defines inflation in the most simplistic of senses, and it uses a hypothetical about counterfeiting that is hardly analogous to real economic conditions and which does not even strengthen his premise. The best simplistic definition of inflation is too much money chasing too few goods and services. His argument is that the Fed is to blame for inflation because it has monopolistic control over the monetary supply. He's got it backward, though. The Fed is a reactionary body that moves to constrain the monetary supply when inflation becomes an issue. The principle critique of the Fed is that it chokes off the economy too much over inflation fears. Furthermore, most economists credit the Fed for maintaining US economic stability. The article also perpetuates the false perception that the printing of money is a cause of inflation. The fact is, paper currency accounts for a small fraction of the monetary supply. I also fault the article because it fails to identify the two types of inflation: demand pull and cost push. Often enough inflation is more or else out of control of the US government, when prices for essential goods such as oil rise to a significant degree and cause a general rise in prices throughout the economy - that's cost push inflation, and it's what occurred during the oil crisis of the 1970s. I do agree that outlawing the trading of precious metals was wrong and should be reconsidered. Yet, that article does not make its case very well.

Someone read the article AND understands. Good job.

-t

[Big Mac]

Originally Posted by turtle777

Someone read the article AND understands. Good job.

-t

Thank you.

[Goldfinger]

Originally Posted by macroy

a bit off topic... but I just realized how worthless one's education is if you don't use it. I have a B.S. in Economics. And while I can explain inflation, supply and demand (which anyone with common sense can as well), SVass's post struck a cord as I do remember who JM Keynes was.... but what were the two theories on economics? Classical and.....

Jesus... maybe I should give my degree back.

Well you DO have a ******** in economics.

[Dale Sorel]

Originally Posted by macroy

I have a B.S. in Economics. And while I can explain inflation, supply and demand (which anyone with common sense can as well).

No kidding, you think someone can figure those things out with common sense

Goodness, I just knew I picked the wrong major

[macroy]

Originally Posted by Big Mac

Classical and Keynesian?

yea - my point was that even after I saw the name, I still could only come up with 'classical'... thus my self ridicule. Although having read my post again, I realized I didn't finish my thought. Guess I need give my degree back AND take a writing class.

[SVass]

And my point was that "classical economics" died during the depression because it caused the depression. The subject columnist (and the current ?) wants to have another. sam

[nonhuman]

Originally Posted by macroy

yea - my point was that even after I saw the name, I still could only come up with 'classical'... thus my self ridicule. Although having read my post again, I realized I didn't finish my thought. Guess I need give my degree back AND take a writing class.

Or just get a job 'consulting'.

[loki74]

Originally Posted by Big Mac

Although I am a conservative, I find the referenced article to be rather poor. It only defines inflation in the most simplistic of senses, and it uses a hypothetical about counterfeiting that is hardly analogous to real economic conditions and which does not even strengthen his premise. The best simplistic definition of inflation is too much money chasing too few goods and services. His argument is that the Fed is to blame for inflation because it has monopolistic control over the monetary supply. He's got it backward, though. The Fed is a reactionary body that moves to constrain the monetary supply when inflation becomes an issue. The principle critique of the Fed is that it chokes off the economy too much over inflation fears. Furthermore, most economists credit the Fed for maintaining US economic stability.

The article also perpetuates the false perception that the printing of money is a cause of inflation. The fact is, paper currency accounts for a small fraction of the monetary supply. I also fault the article because it fails to identify the two types of inflation: demand pull and cost push. Often enough inflation is more or else out of control of the US government, when prices for essential goods such as oil rise to a significant degree and cause a general rise in prices throughout the economy - that's cost push inflation, and it's what occurred during the oil crisis of the 1970s. I do agree that outlawing the trading of precious metals was wrong and should be reconsidered. Yet, that article does not make its case very well.

Classical and Keynesian?

YES! YES! Someone who KNOWS what they are talking about!!!

I would also add that I find often that there is a negative connotation to inflation, as though its some evil force out there. The way I learned it, whenever the economy was headed up in its cycle, inflation would happen to some degree. Then to keep it from getting out of hand, the Fed changes the rate (it has some other stuff it does too, ie changing the reserve requirement, but they are used much less). Then, the economy starts heading down, and to prevent a severe recession, the Fed changes the rate again. From what I understand, inflation is partly a by-product of economic growth. We just don't want it to get out of hand, or it will undo all the good of that economic growth.

...of course, I only have a mere high school elective economic education, which, for that matter has been sitting around deteriorating in the back of my mind for almost a full year. So I could very well be wrong on all this. *shrug*