https://mises.org/library/inflationI saw a Chatbox conversation on inflation that was pretty much out to lunch on the cause/s of inflation and wondered how many people here think they understand the basic principles of economics. Do you? Do you understand what causes inflation?
Agreed.Obama being a "friend" of the poor and middle class is one of the most outrageous lies ever told.
Agreed.
I saw a Chatbox conversation on inflation that was pretty much out to lunch on the cause/s of inflation and wondered how many people here think they understand the basic principles of economics. Do you? Do you understand what causes inflation?
I prefer the old classical definition of inflation, which is just an increase (or inflation) in the size of the money supply. Nowadays people use the term to simply mean an increase in the general prices of goods and services. Of course, the former is often a cause of the latter, but not always.
The new money created by the central bank(s) represents a claim on wealth, but the central banks do not generate any new wealth so, ceteris paribus, more dollars, pounds or pesos will be available to purchase the same quantity of goods and services, thereby putting upwards pressure on prices. However, if there is alot of production in the economy at the time, prices will rise less, stay more or less the same, or can even fall. Of course, they would have fallen even faster without that extra money being put into circulation.
Also agreed.
I prefer the old classical definition of inflation, which is just an increase (or inflation) in the size of the money supply. Nowadays people use the term to simply mean an increase in the general prices of goods and services. Of course, the former is often a cause of the latter, but not always.
Rapid wage increases/rapid rise of the costs of goods materials
I don't think I understand.I saw a Chatbox conversation on inflation that was pretty much out to lunch on the cause/s of inflation and wondered how many people here think they understand the basic principles of economics. Do you? Do you understand what causes inflation?
We track the exchange rates between dollars and every foreign currency, and, the price of gold, which is just another exchange rate. A troy ounce of gold is about 31 grams, and recently gold sells for about $40 per gram.Yes, but what causes these things to happen? The symptom is rising prices. It is the cause behind the symptom that drives the increases. It could be falling production creating a shortage of product but that will most often only affect the prices of those products alone. In the case of prices rising across the board it is far more often, especially with a fiat currency like we have, debt and willy nilly printing of currency that has no relation to real wealth. When we have a system like ours that is based entirely on debt inflation is the natural effect of the system.
We track the exchange rates between dollars and every foreign currency, and, the price of gold, which is just another exchange rate. A troy ounce of gold is about 31 grams, and recently gold sells for about $40 per gram.
So a gram of gold fetches $40. A gram of one-hundred-dollar-bills fetches $100. US currency is 1 gram per note. So, $100 bills are not only worth their weight in gold, but are worth two-and-a-half times their weight in gold (one gram of $100 bills will buy 2.5 grams of gold).
Even a 50-dollar bill is more valuable than gold, since 1 g of fifties will buy 1.25 g of gold.