Quote:
Originally Posted by Humanoid
This conversations about inflation go no where because nobody agrees on definitions. Some equate "inflation" with "prices going up", others are speaking from a Keynesian perspective (like Mircea here with his "different sorts of inflation") and yet others are speaking from a more Monetarist/Austrian perspective.
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You mean uneducated people don't agree on definitions. I'm quoting right out of classical economics.
How did Nixon and FDR know that implementing Wage & Price Freezes would halt inflation? Did they just guess? Or where they relying on well-defined causes of inflation, looked to see what actually was driving inflation and then took action that was appropriate?
And inflation is "prices going up." When the value of anything is inflated, it is reflected through an increase in price.
Absent banking systems and money, inflation still occurs. If there's a shortage of wheat, why should I give you a bushel of wheat for 2 chickens, when someone else will pay me 3 chickens?
Even if there isn't a shortage of wheat, if John the Stalwart is willing to pay me 3 chickens for a bushel of wheat while you won't pay more than 2 chickens, I'll sell it to John the Stalwart because it benefits me.
There's always natural inflationary pressure on prices, but other conditions can exacerbate it.