This is an archive of past discussions. Do not edit the contents of this page. If you wish to start a new discussion or revive an old one, please do so on the current talk page. |
Archive 1 | Archive 2 | Archive 3 | Archive 4 |
I think the introduction should be more clear when it states the two different views of inflation.-- ase 20:37, 6 November 2006 (UTC)
Why is this page full of Keynesian nonsense? The version before "172"'s "NPOV" fixup was more accurate. Does "neutral" (in NPOV) mean that objective facts can be ignored in favour of not disagreeing with counterfactual religious beliefs, or does reality actually count for something? 218.101.88.104 05:10, 5 May 2004 (UTC)
I am trying to take your allegation seriously, but it is too general to take action on. I looked at the contribution made by "172" last summer and find most of it positive. He gave the article an introductory definition when previously it had just been a cause of inflation masquerading as a definition. Yes, some of his contributions show a Keynsian perspective, one or two points may even be contraversial, but I see nothing that is nonsense. mydogategodshat 16:22, 7 May 2004 (UTC)
This paragraph is under the Misery index title: "In opposition to the deadweight loss argument against the redistributive nature of inflation it has been argued that, in economies where the rate of vss capital gains tax is low or nil, inflation acts as an important “wealth tax”, and that low inflation societies will tend to see wealth condensation."
If you google "vss capital gains", the only page you'll find is Wikipedia's inflation article. I'm thinking there should either be an explanation for what that is, or the higly controversial allegation that inflation will act as a wealth tax should be removed. Furthermore, what has that got to do with misery index?--
Ezadarque 02:13, 19 April 2006 (UTC)
I put in the Quantity Theory of Money. Hopefully this would counterbalance some of the Keynesian stuff.
Mydog: I find these statements rather highly controversial: " However, this cost may be "worth it" if it avoids a serious recession, which can have even greater costs.
In fact, controls may complement a recession as a way to fight inflation: the controls make the recession more efficient as a way to fight inflation (reducing the need to increase unemployment), while the recession prevents the kinds of distortions that controls cause when demand is high."
The author of these statements admits that most economists denounce price controls and then goes on to say that they could be "worth it"?? This is non-neutral speculation. Furthermore, I believe his statement that price controls help fight inflation is highly speculative as well. -- Dissipate 07:59, 22 Jun 2004 (UTC)
I agree that that statement smells fishy. Recessions are a natural part of the business cycle and perform the needed function of culling the weak enterprises from an economy. Inflation may be able to delay or postpone a recession but if you go to long, you end up needing an outright depression to clear out the cruft and that is most certianly "not worth it". Carbonate 00:44, 27 May 2006 (UTC)
Shouldn't the Quantity theory of money be PT = MV, where P is the price level, T is the transactions, M is the amount of money in the economy and V is the velocity (or how many times the total amount of money has been spent)?
89.241.175.68 20:57, 18 June 2007 (UTC)
In dealing with inflation there is only one price that should be regulated. And that is the price of money (not the price of credit).
Interest rates are the price of credit. If you want credit then interest is the cost you must bear. The price of money is the amount of stuff you must exchange for a given quantity of money. If you want money then stuff is the cost you must bear.
The price of money is determined by both the supply of money and the demand for money. Hence their was significant inflation during the black death of the middle ages in Europe even though the stock of money (gold coin) was basically fixed. During this period the demand for money dropped significantly as the population and the economy contracted. Moneys value plummeted briefly.
Regulating the price of credit through interest rate policy is just good old fashion centralised command economy thinking. Instead the price of money should be benchmarked against gold or a commodity index and regulated using [open market operations] or better still self-regulated in a system of free banking.
There mistake of the 1980s was thinking that the size of the money supply should be regulated. Its the value of money thats most important not the quantity.
The current mistake is in thinking that a government appointed guru should be given god like market power in order to control the price of credit.
TERJE 22-JUNE-2004
11:07, 22 Jun 2004 (UTC)11:07, 22 Jun 2004 (UTC)
Should the article be called "Price inflation"? My understanding is that this is what the common use of the term is short for. The current title could then go to the existing disambiguation page.
As it is now, the intro paragraph begins "In economics, inflation is a fall..." which seems counterintuitive and does nothing to explain the reason why the term is used. I will insert the word "price", which seems to clarify as well as provide a more useful contrast with the alternate usage and the 1920s US example in the second paragraph.
toh 23:39, 2004 Oct 17 (UTC)
I would also go for that ae» inflation page, i.e. monetary expansion.
-- The HellCat 23:16, 28 October 2005 (UTC)
Just had a poetry attack while reading this article -- it's extremely lame and I'm very ashamed of myself, but couldn't help it:
"Why is there ever inflation?"
Is always the common man's question,
When we all know that the nation
Builds goods in excess of consumption!
-- Gutza 23:53, 5 Nov 2004 (UTC)
Of course -- and they do decline. Take a look at all technology-related products: apart from the obvious case of the IT industry, there's cars, watches, air conditioners, cameras, sound systems, and so on. If you were thinking about base products (food industry for instance), at some point they're destined to reach a point where it simply doesn't make sense to increase their crops/herds/etc, because there wouldn't be a market for all the stuff, and it would be wasted -- therefore they don't increase production any more, therefore the prices don't drop any more. But overall, the production exceeds consumption, and the overall wealth of all people increases, and as a result new money are needed to cover for all the positive wealth delta.
For completeness, here's a quotation from the current version of the article: "because the general amount of wealth gradually increases in an economy (as long-lasting things are created, new technologies invented, et cetera), a small amount of currency inflation is actually necessary to keep prices stable, and need not cause price inflation." -- Gutza T T+ 12:41, 8 May 2006 (UTC)
Inflation - the mechanics of inflation: the great government swindle and how it works A detailed analysis of the mechanics of the great modern government swindle known as inflation.
We are under an obligation to provide credible sources first. This one isn't credible. Stirling Newberry 19:24, 30 Dec 2004 (UTC)
Well I looked at the page, and I don't see the joke. It looks a lot like a "colorful" version of "What Has Government Done to Our Money?"---an Austrian classic.
131.215.242.164 20:14, 27 December 2006 (UTC)
if the article isn't going to adequately recognize inflation as inflation of the money supply (adequately, as in part of the primary definition in the opening paragraph), it should be renamed "price inflation". the opening should at least be changed to "In popular terminology, inflation is an increase in the general level of prices of a given kind." "economics"? c'mon. the implication that only austrian economists hold the money supply definition is almost creepy. remember, popular opinion is not necessarily NPOV. SaltyPig 00:53, 27 August 2005 (UTC)
Economists usually factor out food and energy prices because they jump around so much; doing that showed zero inflation.
But factoring out food--and especially energy--may not be the best way to look at the inflation numbers at this time. Energy costs, many economists fear, will play the leading role in the economy in the next few month.
This article has been larded up with POV garbage, outright violations of citability, and carving by POV warriors. Assertions like "the mistaken use of" and so on are simply against the rules. I've rolled the article way back before these edit ars, and will take a more interventionist stance from here on in to protect the article form anonymous vandalizing.
Once again, the rules are that we are producing an encyclopedia reprsenting citable sources in an NPOV manner without original research. These addtions were such a mess that keeping them was simply impossible. Vague circular loops aboutglobalization, gold bug sermonizing and the rest are not acceptable.
Stirling Newberry 14:07, 12 November 2005 (UTC)
Reversed all of Stirling Newberry's changes as he has reverted to a much earlier version than justified, wiping out the work of many good editors. True, some improvement is needed. But rather than improving the layout of removing irrelevencies and tidying up, he just puts it back to some vague date in the past. Please have another go, Stirling, but do it properly. You are not a Cyber God. Deception 16:29, 12 November 2005 (UTC)
I sincerely doubt that Austrian economists are the only ones that hold inflation is an increase in the supply of money. Look at webster.com - "an increase in the volume of money and credit relative to available goods and services resulting in a continuing rise in the general price level" -That's the exact definition Milton Friedman (who is neoclassical, not Austrian, or so I've heard), that inflation is an increase in the supply of money that outpaces the increase in output.
On the front page: "General inflation is a fall in the purchasing power of money within an economy". Isn't inflation is a general rise in price (which includes wage because wage is determined by productivity and price) and NOT purchasing power? __earth ( Talk) 07:47, 27 January 2006 (UTC)
There are three meanings of inflation and all of them are valid and correct. The three meanings of infaltion are:
Watercolour 15:37, 28 January 2006 (UTC)
If as you say, the first two are the effect and the third is the cause, are they really the "meaning"? If that is true than the meaning of disease would be that you cough...
Every government in the whole history of mankind has inflated and allowing the use of price increases as equivolent to inflation as the media constantly does makes it easier for the very organisation who are responsable for increasing the money supply to justify it. The article on inflation should be very clear about what is REALLY inflation and what are just the effects of it. If the effects must be mentioned, they should be properly labled as effects and not portraid as the cause or "meaning" even if that is what is commonly used in the media.
Carbonate 00:55, 23 May 2006 (UTC)
---
Inflation is, in fact, just the increase in the general price level ONLY. The way the money supply moves is irrelevant. Friedman's definition - "an increase in the volume of money and credit relative to available goods and services resulting in a continuing rise in the general price level" is not totally correct. It is possible to get inflation with no change in the money supply (eg higher oil prices) and vice versa. Friedman actually recanted his earlier belief that watching the MS is the best way to target inflation (central banks now use the MS to target cash rates).
-- ravage 06:37, 6 June 2006 (UTC)
The problem with your statement "Inflation is, in fact, just the increase in the general price level ONLY" is that it discounts things like economies of scale as deflation and scarcity of goods (eg. oil) as inflation. Yes prices can change without a change in the money supply but those changes are not inflationary. Inflation is an increase in the money supply and the resulting changes in prices are the effects of inflation and not inflation in and of themselves.
Consider your sentence "It is possible to get inflation with no change in the money supply (eg higher oil prices) and vice versa." with the slight change "It is possible to get price changes with no change in the money supply (eg higher oil prices) and vice versa.".
Carbonate 04:28, 18 June 2006 (UTC)
Carbonate:
Price changes may not be inflationary. An general increase in the price level is. May I direct you to the
Economist -
'Rising PRICES, across the board',
Econlib - 'Inflation is the loss in purchasing power of a currency unit such as the dollar, usually expressed as a general rise in the prices of goods and services', and Mankiw's Macro text - 'Inflation: An increase in the overall level of prices'.
The last few years has seen historically low interst rates (ie CBs have been increasing the MS) and yet inflation has been contained. How? Central banks have been able to do this partly because of the deflationary impact of China's industrialisation- a real, not monetary phenomenon.
Increases in the money supply are inflationary to the extent that they increase the price level. Pg 94 of Mankiw's 5 ed. - 'Money supply and money demand determine the price level. Changes in the price level determine the inflation rate.' The quantity theory of money in a nutshell. -- ravage 13:34, 20 June 2006 (UTC)
First the inflation bounty is $1, now it's $5. Forgive me if my maths is wrong, but that's 400%! What greater testiment to inflation could there be? Gwaka Lumpa 15:51, 18 December 2005 (UTC)
I was wondering, if you buy a gold ring, will that increase inflation? Only the young 01:22, 4 March 2006 (UTC)
No, inflation is a function of size and 'nothing' else. By purchasing a ring you have not increased the amount of money in circulation (unless the money you used was home made ;) ) and the loss of gold in the production of a ring is kept amazing low by gold smiths who recycle even the gold contained in the fabric of the buffing wheels used to polish the ring. Any loss of gold that does occur is actually deflationary.
Carbonate 00:31, 23 May 2006 (UTC)
What are the consequences of inflation have not been discuessed yet in this article, such as "shoe leather cost", "menu cost" etc. egc
The most important consequence of inflation is that those who save are made poorer. Everyone who owns there house, everyone with a stock portfolio, everyone with money in the bank. This makes society poorer because it is the savers that invest in new businesses, new captial good and create new jobs. These should be the headline consequence with "shoe leather cost" an mere foot note, otherwise you risk marginalising the real problems.
Carbonate 00:37, 23 May 2006 (UTC)
The current opening paragraph is:
As far as I know, there is little consensus about the varying definitions of inflation -- according to economic theory, they should all coincide, but according to actual measurements, they don't. When something like consumer price inflation is talked about, even by economists, they certainly do not mean an increase in the money supply.
And it's certainly not a fallacy! It's a mistake, maybe, or a usage that isn't discussed in the article (except it is, because the inflation-rate-by-country graphic is most certainly not based on money supply measurements), but a fallacy is something quite different.
In short, this needs a lot of work.
RandomP 09:09, 12 May 2006 (UTC)
If gold isn't money, why does the U.S. Air Force pack ejection seat kits with gold sovereigns? LMAO, not even gold eagles but sovereigns!!! Gold is and always will be money because it is rare and hard to get (you try going in to a South African mine 2 miles deep without dieing from the heat). USD are common and getting more so by the minute. Many governments have tried to obsolete gold and all have failed because they can't resist debasement. I recognise what you are saying about the bretton woods agreement but what is 30 years compared to 3000? As for the "few gold bugs" many many asians and indians (ie 1/2 of the people on the planet) use gold to save and not the USD. The world does not revolve around the U.S.. Carbonate 00:57, 27 May 2006 (UTC)
Carbonate 19:58, 27 May 2006 (UTC)
For the record RandomP, saying that governments issue money as opposed to central banks is not a point of view issue. At most it is a poor choice of terms. Stop trying to force every comment into a, "it doesnt agree with me, therefore it isnt neutral" hole. Not productive, not appreciated. Oh and yes, gold IS money and for that matter so is silver, and it shall remain so for so long as man inhabitith (sic) this earth. That was an allusion to the lifespan of gold and silver's status as money.-- Morgan 07:09, 21 June 2006 (UTC)
I've removed that section. It's too long (with not a single wikilink -- in fact, it's so long that I didn't really bother reading it at all until today), unencyclopedic, and makes wrong assertions.
If there's anyone who actually wants this in, please take the time to fix it, and add it back in piece by piece, with discussion. I see nothing of value in it.
RandomP 10:57, 14 May 2006 (UTC)
Gold has held its value and spaned many a fiat currencies. Anyone who belives that the Bretton Woods agreement changes the status of gold to anything less than money is foolish. Also, the current heading of gold in the inflation article states that some people regard it mearly as a metal which is false; no one would refuse an ounce of gold in exchange for a meal or pair of shoes. It is important to convey this 'forever' value that gold has over the 'for now' value of even the U.S. dollar (which is its self being inflated away at an incredible price since Nixon halted the exchange of dollars for gold).
Carbonate 00:26, 23 May 2006 (UTC)
I am requesting mediation on this issue Carbonate 20:50, 27 May 2006 (UTC)
Those who argue that gold some has special status as money are not merely out of the mainstream, they are confined to a small contingent of right-wing/libertarian cranks, none of whom hold any significant academic appointment, and many of whom are affiliated with those who market and sell gold coins and other gold investments. The fact is, the value of gold is not a measure of inflation any more than any other commodity metal. It does serve for many as a hedge against inflation, but again, so do many other commodities, investments, and financial instruments, such as silver, copper, real estate, inflation-indexed bonds, and commodity futures.
No difficult or complex argument is even needed to understand this. The dollar/gold ratio changed from $35/ounce as the official ratio pre-Nixon to $800 in 1980 to well under $400 in the late 1990's. Did the cost of living rise 20-fold from the 1960's to 1980, and then decline by more than half from 1980 to 1995? Anyone with a rudimentury knowledge of history, or who lived through these periods, of course knows this was not the case.
Inflation a measure of the price of money, while the price of gold is a measure of the supply and demand of a certain commodity that once was used as money.
This article ought to discuss significant minority viewpoints, but the goldbugs are not a significant minority. They are more akin to the creationist view of the origin of man. That is, a small minority of right-wing cranks. That they may be a very vocal minority here does not change the fact that their views should not be respectfully discussed in an encyclopedia. Kitteneatkitten 20:24, 1 July 2006 (UTC)
I'm sure this will be heavily contested so before you start, please read at least the first part of Adam Smith's book "The Wealth of Nations". Is is free (published in 1700s) from the Guitenburg Project and made enough sense for someone to name a beer after the guy ;)
Carbonate 01:00, 27 May 2006 (UTC)
It would be nice to have a table showing what a U.S. dollar in 1900, 1905, 1910, ..., 2000, 2005 would actually be worth in each subsequent labeled year. To make it clear, I'd like to know for example how many 2005-year dollars would be equal to one 1970-year dollar, and so on for each pair of years. I realize these numbers would be averaged best-guesses, but seeing the real impact of inflation in a country that has at least made some attempt to control it would increase the impact of this Wikipedia article. - Wfaxon 06:48, 8 June 2006 (UTC)
The figure quoted widely is that the dollar has lost 95% of its value since the creation of the Federal Reserve. Carbonate 04:43, 18 June 2006 (UTC) good
User:Carbonate and I had a very long discussion, both here and in a mediation case, about the subsection "Gold" in the section "Measuring Inflation", which currently reads:
My suggestion for this section, if it is to stay, is
This is drastically shorter, but is, I believe, an accurate description of the history of gold as money, and what little can be said about it as a measure of inflation.
RandomP 19:21, 17 June 2006 (UTC)
I proposed the section say:
--
In 1913, J. P. Morgan said before the House of Representatives "Gold is money, and nothing else." in opposition to the creation of the Federal Reserve. The precious metal gold has been a benchmark of inflation and have held their value for millennia compared to the centuries, at most, of the Denarius and Pound sterling both of which started out based on precious metal. Gold has experienced an historical inflation rate of about 1% per annum and it is this restrictive rate which has prompted governments throughout history to turn to debasement and the creation of fiat currency. While the rate of inflation of the gold supply is limited by the effort required to find feasable deposits, the labour required to mine the deposites that are found and the energy required to refine the mined ore in to gold, nothing effectively stops governments from printing currency. Gold and silver, in one form or another, were used as money from at least 600 BC and are currently minted in to gold coin and silver coin all over the world.
At the Bretton Woods Conference, the Bretton Woods system reinstated the gold standard by requiring the signatories to adopt an exchange rate for their currency. This system remained in place until 1971 when Richard Nixon announced "The gold window is closed." after France began to demand gold for the U.S. dollars held by the central bank of France. This run on the U.S. gold deposits happened because there were more dollars in circulation than was backed by gold. Today, the U.S. Treasury values its gold at $42.2222 per troy ounce as stipulated by the Bretton Woods agreement.
--
I belive we should check the accuracy of the Nixon quote. This may be a similar situation as the JP Morgan quote where the meaning has been diluted over time. I have removed the 2nd sentence compleatly and changed immutable to restrictive while eliminating the "mined and refined" part which is better said shortly after.
I belive that starting with the federal reserve quote makes a nice transition from the money supply measure which proceds it. I belive that having the historical use of gold as money at the end of the last paragraph and the discussion of the bretton woods agreement provides a clear seperation of the two ideas and allows for good flow and tie in between the paragraphs. I belive RandomP wanted the word solidified changed to reinstated or something to that effect so I have done so. The year that the bretton woods ended has been included as well as the removal of "represented by" language.
I also trimmed a duplicate link to fiat currency and shortend the 2nd instance to just currency.
Carbonate 04:40, 18 June 2006 (UTC)
An anonymous user added some comments to the article; I think they should be addressed, but I don't think they belong in the article proper. I've thus moved them here. Note that the comments are not mine, I'm just copying them over.
RandomP 18:07, 30 June 2006 (UTC)
needs clarification
does not follow, needs clarification. Complete crowding-out only occures when money supply is fixed (LM curve is vertical), as the economy it is pegged to the gold standard
why?
As I commented above about the section on gold, which I have now repaired, this article is far below wikipedia standards because large portions of it are written by far-right-wingers whose eccentric views of money and inflation are far outside of the economic mainstream (and let me add the economic mainstream is fairly well dominated by political conservatives, for instance Martin Feldstein (Harvard), Greg Mankiw (Harvard), and Milton Friedman (Chicago), so it is fair to characterize the viewpoints advanced buy this article as far-right).
It is simply amazing that an article on inflation contains almost no mention of the velocity of money, a concept central to the understanding of inflation. My suggestion is that a ground-up revision of this article closely match the form and content of the discussion of inflation in introductory macroeconomic textbooks. Personally, I have seen versions of the intro to macroeconomics textbooks authored by Mankiw, Krugman, and Hyman, and they are very good and very clear and any of them would be an excellent start to a revision of this article.
There is indeed real controversy among economists on how to define and measure inflation, but it is not between the far-right goldbugs and the rest. Kitteneatkitten 21:26, 1 July 2006 (UTC)
My suggestion would be you reread those intros and give it a shot! Even if a total rewrite might not be acceptable to some contributors, it would be a great thing to have in the Wikipedia database, and this article does need work.
You might also find it helpful to review other WP articles, particularly money supply, which at least mentions the monetary exchange equation.
Good luck!
RandomP 21:49, 1 July 2006 (UTC)
I would if I have the time. As I said, it would probably be best to start with a completely new article based on a college textbook. Maybe there already is such an article on some economics course webpage. I agree with the poster who called the article as it stands now a disgrace. It is the worst major article I have seen on Wikipedia. For now I only have the time to correct the worst of the gold bug weirdness.
Kitteneatkitten 18:59, 10 July 2006 (UTC)
The aweful part of this article is the Keynsian nonsense. Even tho he was correct in his assertions that speding influnces the economy, it is the "weak economic force" compared to the money supply which is the "strong economic force" (analogy to nuclear forces intended). When Keynesian theories agree with monetary theories then the economy tends to move as they both indicate. But when keynesan theories oppose monetary ones, the economy tends to move with the monetary ones.
You can not spend your way to prosperity. You can not print your way to riches.
Carbonate 07:52, 2 July 2006 (UTC)
Among the problems I corrected and improvements I made in the gold section:
1. There is a saying "Gold is money, period."
An unattributed and ideological quotation is not an appropriate way to begin a sub-article. Removed.
2. Gold has experienced an historical inflation rate of about 2% (subject to short term swings many times larger than this) as new supplies are mined and refined and it is this immutable rate which has prompted governments throughout history to turn to the creation of fiat currency.
Unsourced, vague (no time period specified), not NPOV. Replaced by a discussion of debasement, inflation, and hyperinflation under gold and under fiat money.
3. The discussion of American monetary history unaccountably focuses on the events of the early 1970’s. Replaced by a better written and more general and informative overview of the gold and silver standards in US history.
4. The discussion of the current minting of gold and silver coins is expanded and put into appropriate context (an investment vehicle, not for use as money).
5. Today, the U.S. Treasury values its gold at $42.2222 per troy ounce as stipulated by the Bretton Woods agreement.
Incorrect and deleted. The book value of gold in the US Treasury is $42.2/ounce. Book value is an accounting concept that often, as in this case, has no relation to market value, which is the concept a reasonable person would think of when the word “values” is used.
Besides being incorrect, the book value of gold held by the U.S. Treasury is irrelevant, an unimportant bit of trivia. Kitteneatkitten 21:45, 1 July 2006 (UTC)
Carbonate 07:43, 2 July 2006 (UTC)
I have updated the gold section to what had been discussed in the medation between RandomP and myself even tho there was little input on the RfC.
In another lame attempt to censor the current inflation issues faced by U.S., the graph that plotted the money supply was tagged as being copyrighted. I have created a new graph with data up to May 2006 and placed it in the public domain.
Carbonate 06:34, 13 July 2006 (UTC)
A number of things stop banks from printing currency willy-nilly, and the book value of gold has no relevence. Please insert in-line citations for all fact tags before removing. Thanks. Hipocrite - «Talk» 12:43, 14 July 2006 (UTC)
Did you read the mediation? Carbonate 14:27, 14 July 2006 (UTC)
A critique
Gold and silver historically were the two metals most used as money, though no major economy does so now. Because of the costs of mining and processing gold and silver, these metals are not as prone to hyperinflation as fiat currency. Still, hyperinflation often did occur in nations that used gold and silver as their currency as a result of the debasement of their coinage, the process in which the gold and silver content of coins is reduced, sometimes to the point at which virtually no gold or silver is used at all in coins that were once at least 90% pure.
Gold and silver, in one form or another, were used as money from at least 600 BC. Gold and silver coins continue to be minted all over the world, in particular in South Africa, Canada, China, Australia and the United States. These coins are a convenient way to invest in these metals. In the early United States, the gold and silver coins of other nations, in particular Spain, were among the most common types of money, in particular those used for foreign trade. The term "2 bits" comes from an spanish coin that has been cut in to eight pieces.
The use of metals like gold and silver as money became unpopular because as Western economies expanded faster than the supply of gold and silver following the Industrial Revolution, deflation was the frequent result. Deflation, especially rapid and unexpected deflation, causes great distress for debtors, who must repay their loans with increasingly valuable money.
Typical of other Western countries, at some point or another, the United States has used a de jure fiat currency, a real gold standard, a real silver standard, hybrid systems in which the dollar was officially backed by gold and/or silver but restrictions on convertibility of paper money to the metals meant the dollar was de facto a fiat currency.
The United States dollar stopped being even a de jure gold-standard currency in 1972 after Richard Nixon "closed the gold window" following French demands that the United States exchange gold for the US dollars held by its central bank.
Is inflation an invevitable condition of our international economy? Does it have discreet causes that can be addressed by public policy or coordinated efforts of consumers? I remember my first computer that cost over $1000 in 1974. My first PC nearly a decade later cost about the same but had 1,000 times the power and capabilities. My latest PC cost only $500 and is at least a million times better than those earlier models. It is a clear example of improvements in technology and manufacturing leading to much more product for actually much less money.
So if someone makes a breakthrough on fuel technology or cheap, long-lasting batteries, could we possibly anticipate a dramatic reduction in the cost of transportation?
I bought a Pontiac Firebird in 1991 for $13,000. Soon after GM dealers were offering Camaros (essentially similar car) for as low as $10,500. Then GM decided to redesign the car, shortening it somewhat, and possibly making a few other techological improvements and priced it at nearly $20,000. Was the price increase a result of the costs of retooling and redesign or just a way to increase their profit margins? The result was that fewer were sold (less demand at the higher price) and the product was recently discontinued. I wonder what would have happened had GM simply made minor changes instead of a total redesign. Could the price have stayed in the $11,000 to $12,000 range? Would it still be in production today? I note that the PT Cruiser still is sold in this low price range, although it isn't quite as popular as when it was first introduced.
Could we manage to keep inflation under control by simply keeping successful product lines in existence? Who would make that decision?
unsigned on 11:34, 28 July 2006 by User:Rrman
Electronics are the worst possible item to compare. Electronics benifit from miniaturization which nothing else does. Your car isn't 1cm long, your fruit isn't measured in milligrams and you don't live in a doll house. Electronics by their very nature are not valid to compare over time. Try substituting "a house" or "a loaf of bread" and see what conclusion you come to. The car example shows that prices of goods that consume quantities of material (iron ore, energy to reduce the ore, silica, energy to turn the silica in to glass, etc) are going up in price.
What you are really asking is, can we hide inflation with economies of scale. The answer is no. Economies of scale are a natural product of mass production (especially in electronics) and in your example the amortization of the development costs over more and more units. This is not deflation and it doesn't counter the effect of doubling the number of paper dollars in the world. Dollars (or whatever) have value because they are scarce. When you double the number of dollars, you halve the value of all of them. Unless of course you are in to hyperinflation in which case you more than halve the value of all the dollars.
I believ the US is on the verge of hyperinflation. Why? Because they have a triple deficit
And that doesn't even cover the goodwill "everyone in the world hates america" deficit.
A billion here and a billion there and pretty soon you are talking about real money - some U.S. Senator.
Carbonate 12:22, 1 August 2006 (UTC)
The formula for compound interest is
Assuming that
Carbonate 12:01, 1 August 2006 (UTC)
I'm not sure the recent addition is suitable. For one it draws unsupported opinions about people by placing them in the dove or hawk categorys. I also disagree with having Greenspan as a hawk as he printed more money in his tenure than everyone before him combined.
Carbonate 00:57, 4 August 2006 (UTC)
[User:Kitteneatkitten] has suggested that I am vandalising this article by insisting on balanced content with fringe ideas that don't appear in any textbooks. I would like him to explain how the ideas of Adam Smith constitute fringe. J.P Morgan Chase is one of the largest banks in the world and part owner of the Federal Reserve. J.P. Morgan was a successful and well respected banker. These people are not fringe by any definition of the word. I would also be interested in how he justifies the oppinion of billions of people on the Asian continent constitute a minority.
I understand that you don't agree with me Kitteneatkitten, but many others do and you should not be putting people down by dismissing them and calling them right wing "goldbugs". Everyone is entitled to their opinion and to have their ideas respected. I feel you have done nothing but disrespect my freedoms by belittleing me and censuring my content. If you wish to express your ideas I encourage you to do so but not at the expense of mine. Carbonate 05:57, 6 August 2006 (UTC)
The use of term "goldbug" is not derogatory, many people indentify their investment views this way. I did not remove Adam Smith's theory. J.P. Morgan was not an modern economist, and even if he were, one of his random polemical quips attacking the Federal Reserve has not place in the section about the measurement of inflation.
Your wholesale removal of my edits, which were great improvements on the previous content, because they disrupt "balance" certainly was vandalism. Go ahead an improve my changes, if you can, but that wasn't what you did. You simply destroyed my work.
I have no idea what you mean by "oppinion of billions of people on the Asian continent." Kitteneatkitten 03:15, 10 August 2006 (UTC)
What happens when you inflate a tire? It gets bigger. Tires can get bigger for other reasons, heating of the air for example (which is an increase in velocity of the air) but when one inflates a tire one is generally at a service station and using a pump to add air. The same is true for the economy. Inflating the money supply makes prices bigger. Inflation is an increase in the money supply. It is not a result of it direct or otherwise. When the money supply is inflated, prices get bigger. Other things like money velocity and shortages can make prices bigger but it is the change in money supply that delivers real results. You wouldn't try to make your tire bigger with a hair dryer would you?
Carbonate 04:50, 7 August 2006 (UTC)
Reviewing this page, the concerns about the POV and OR nature of the gold section are numerous and repeated. Some of the facts that do not appear to be appropriately sourced to me include:
Do you dispute the math above?
Provide an example of gold that costs nothing to mine or process
Sourced from gold, did you not even do basic research?
The math is laid out in this discussion. Please detail your questions there
The following presentation uses weasel words, and is not acceptable:
I uses weasle words because it was written by anti gold people.
The following sentence is antiquated and has no relevence in an article about inflation. Please include your information in the article about the Federal Reserve.
In conclusion, this section requires substantial work before it can be included, and its present, unsourced, unnatributed polemical state is not acceptable. Please correct the sourcing and attribution.
JBKramer 16:21, 8 August 2006 (UTC)
You have not done even basic research or read the extensive discussions.
Carbonate 16:38, 8 August 2006 (UTC)
Is the CFP Group, a gold selling service, a reliaible source for the amount of gold in the world? CF [2]? JBKramer 16:42, 8 August 2006 (UTC)
No, it is not. Companies that sell gold have an interest in promoting the metal as an investment, and are not reliable sources for information relating to the supply and demand for the commodity.
Kitteneatkitten 00:08, 10 August 2006 (UTC)
Probably the best way to include the gold/inflation info that you want, Carbonite, is to find notable people who say the things you want said, and then quote them, without doing any math at all. Could you find some notable goldbugs that agree with you and quote them? JBKramer 16:47, 8 August 2006 (UTC)
Did you read the discussions? It has already been listed so obviously you have not. Carbonate 17:23, 8 August 2006 (UTC)
The reason this article is such a disgrace, despite the best effort of many editors, is that Gold-obsessed editors have repeatedly reverted other edits, making what should be a straightforward encyclopedia article into a disorganized and incoherent jumble of paragraphs.
Some particular problems:
These errors will remain as long as Carbonate aggressively reverts attempts to improve this article. Kitteneatkitten 00:06, 10 August 2006 (UTC)
Have a look for yourself.
http://en.wikipedia.org/?title=Inflation&oldid=4219789
Two years of edits have made the article worse. It was fine then, it is a disgrace now. The ideological edits made by libertarians so the article reflects their various pet theories is the only cause I can identify.
Kitteneatkitten 03:20, 10 August 2006 (UTC)
Much attention has been given to the premise that inflation of the money supply is the cause of inflation. This I agree with whole-heartedly, and I absolutely can't stand the Keynesian obfuscation of simple economic concepts.
However--and I may be guilty of not reading word for word the entire talk page--little time is given to the mechanisms by which the money supply is increased. Elucidating these may help many people who are struggling with our definitions. Money supply increase, they ask. What does that mean, and how is it increased?
As far as I'm aware, its accomplished in two ways:
1) "Printing" more money
2) Fractional-reserve banking
Now I have to agree that most of our money isn't really printed, but mainly exists as ones and zeros in computers. But for all intents and purposes, it it just created out of nothing. I guess more specifically goverments tend to claim that the newly created money is backed by its ability to tax its citizens, but there is no commodity backing, and thus nothing really prevents governments/central bankers from turning off the lights, locking the doors, and letting the printing presses run forever.
Second, and this is important, the institution of fractional-reserve banking (something that was considered criminal a hundred and fifty years ago in the U.S.) goes far in increasing the money supply. Financial institutions need only hold a small reserve of actual deposits while they loan the balance out. One institution doing this may not necessarily inflate the money supply, although it does constitute a double claim against the deposited money, but many institutions doing this over the same initial deposit WILL increase the money supply.
And as far as measuring inflation goes, doesn't the Federal Reserve publish numbers (M1, M2, etc.) about certain aspects of the money supply. It was my understanding that a clear picture of inflation could be gleaned by just simply doing some addition or subtraction. Now, however, the Fed has decided to stop publishing M3. I can't see why this needs to be a secret but its no longer available to us mortals as I understand.
- Bogomips (I'll register later)
Wow, quite a change in the article. But I notice that all the monetary theory view as to how inflation is measured has been removed. Either one of you kainsians can do it or I would be happy to.
As for how the money supply increases, Newberry seems to be a little out of date, as although what he says was true, the fashionalbe thing these days is Repurchase Agreements which have their own wiki article. That page should be linked to but not regurgitated.
So who is going to balance the article with the monetary viewpoint? Carbonate 17:12, 17 August 2006 (UTC)
So if monetarisim relates inflation to the amount of money, why does the formula not include the amount of money? In fact, that formula looks an aweful lot like an expression of the simple supply/demand curve! And then they explain it all by saying supply and demand for products ergo money supply?
Carbonate 01:41, 18 August 2006 (UTC)
Carbonate 22:38, 21 August 2006 (UTC)
Anoynmous alledges that "inflation is a rise in the aggregate money supply." Can someone cite this from reliable sources? JBKramer 16:24, 24 August 2006 (UTC)
Newer editions of Websters have changed to this definition. Historically, Websters used the definition relating to money suplly with only a mention of a relationship to rising prices.
I think this quote illustates that the founders understood inflation to be a monetary phenomenon. If you can't see that, well, you obviously have a biased POV. —Preceding unsigned comment added by 66.206.174.80 ( talk • contribs) 18:24, 24 August 2006
Thanks for the advice about the revert rule, I'll read up on these rules and will endevour not to break them again. As to your dismisal of my citation of a historical reference to inflation, your point is somewhat lost on me. I was just illustating the fact that the meaning of the word "inflation" had been historically given meaning that relates to a monetary phenomenon. The fact that the semantical interpretation of the word has changed with time is really of little concern to me. Attempts at changing the meaning of words and concepts has often been motivated by political agendas (particularly in the field of economics). Why else would such a profound word & concept (inflation) be relegated to terms such as "monetary base expansion"? Terms not easily grasped by the layman. Let's endevour to keep important concepts simple and not to obfuscate related concepts by pedantically over intellectualizing them.—Preceding unsigned comment added by 66.206.174.80 ( talk • contribs)
I didn't imply in anyway an intention of discussing versus reverting, and I consider the definition of inflation to be a single purpose endevor. I'll be happy to continously change this definition to the correct one (something I view as a very honerable pursuit) as long as I have access to this site on any computer I can get my hands on. I also have plenty of free time in my life to make this a life-long mission as my understanding of economics has provided me with an overabundance of free time. —Preceding unsigned comment added by 67.9.190.5 ( talk • contribs)
I reverted the most recent changes because embedded in them was the statement that Robert Lucas "found no significant relation between Money growth and growth." This is totally and completly innacurate. Lucas found that "Unanticipated monetary expansions... can stimulate production as, symmetrically, unanticipated contractions can induce depression." JBKramer 14:30, 31 August 2006 (UTC)
I laugh out loud at the Chevallier graph. It finds an inverse coorelation between the difference m3 growth rate and economic growth rate (%delta(m3)-%delta(GDP)) and the economics growth rate (%delta(GDP)). How could such a coorelation POSSIBLY exist? Perhaps because %delta(GDP) is in both equations? JBKramer 14:37, 31 August 2006 (UTC)
Thank you JBKramer for protecting this article against the goldbug vandel(s). Kitteneatkitten 23:45, 31 August 2006 (UTC)
This article still misrepresents and under represents the monetary view. I expect that between the two of you it will be corrected or I will revert back to an early July version of this article. Welcome to Writing for the enemy. Carbonate 06:15, 1 September 2006 (UTC)
This page really needs a bibliography. Anyone interested in compiling it? Stirling Newberry 15:08, 1 September 2006 (UTC)
"In the long run, inflation is a Monetary Phenominon" is a statement without meaning - In the long run, we are all dead. "In the long run" does not mean the same thing as "Ultimately." JBKramer 21:20, 13 September 2006 (UTC)
Alan Greenspan says: "Although many factors may affect inflation in the short-run, inflation in the long-run, it is important to remind ourselves, is a monetary phenomenon."; Jean-Claude Trichet: "because in the long run inflation is a monetary phenomenon"; Ben Bernanke: "Ultimately, inflation is a monetary phenomenon, as suggested by Milton Friedman's famous dictum." These are as mainstream and influential economists as possible, and, as it’s showed, sources fully support the statement. -- Vision Thing -- 08:59, 14 September 2006 (UTC)
PPI vs. M2 [5]
Can someone provide a source that Keynesian's view on inflation is a mainstream today? -- Vision Thing -- 12:45, 15 September 2006 (UTC)
You already did so - [6]. JBKramer 13:11, 15 September 2006 (UTC)
See both Gordon and Blinder on the issue. Stirling Newberry 13:52, 15 September 2006 (UTC)
Is a good description of the econometrics of inflation. Since this is more important to more readers than arguments over classical political economy, we should have such a section. Creating a market basket, deciding what is price increase from inflation and what represents productivity, baselining, seasonal adjustments - these are all issues where there are pervasive misunderstandings and errors in reporting.
Stirling Newberry 03:51, 18 September 2006 (UTC)
This is the first discussion I've ever read. It is really scary. It has lowered my confidence in Wikipedia articles considerably. I admire the restraint most of the editors show, but is there no way to shut down someone who is truly disruptive and will not let go? CasualReader 17:01, 20 September 2006 (UTC)
This article is not the place for essays, opinions, or criticism. Terms like "dogmatic" do not belong here (under "Effectiveness of interest policy") and this article should only contain descriptions of the topic and NPOV descriptions of different theories. Be careful to only add facts to the article. I'll get around to some edits and organization soon. ~Kruck 17:41, 2 October 2006 (UTC)
Then where? I came to this artcle hoping to find examples of cost differences -- essentially, time-travellers exchange rates pretty much -- out of interest after reading the article on History of pizza, where it states that the first pizzas sold at Lombardi's in NYC cost a nickel, but since many people couldn't afford that, they sold by the slice.
The idea of people not being able to afford a nickel when we commonly throw pennies away now (and some countries with a dollar system have stopped having one cent pieces) was pretty extreme, and so I wanted to be able to look up the purchasing power of different amounts.
So, if this article doesn't go this direction with any of it, can someone suggest which article might? Personally, I think such information is just as on topic as the theories on why inflation happens.
This article really needs some kind of graph for support. Does anyone agree that an image like [[Image:Supply-and-demand.svg]] from the Supply and demand article is an appropriate way to display inflation? My econ professor at Ohio State University uses graphs like these to give a basic idea for what happened in many historical situations. I think we could use several in this article as well. ~Kruck 05:41, 16 October 2006 (UTC)
There was a graph but the keynsians forced its removal to keep their notions on top...
Carbonate 17:02, 23 October 2006 (UTC)
I would like to note that the next time I update the graph of the money supply, I will incorporate the recent changes made to the legend background colour made by another editor. Thanks for the interim fix. Carbonate 04:46, 6 November 2006 (UTC)
What can be suggested for the pre-modern inflation tendencies, generally the reduction in the silver content of say the denarius that took place from the mid 1st to the 3rd century, in which case the coin was replaced by the antonninus, or the english penny which was silver, then a large and finally a small bronze coin. Or the chinese over issuence of paper money especially uner the Yuan(Mongol) rulers, where the coinage value fall as the paper money in circulation outstripped supply. Enlil Ninlil 05:56, 17 October 2006 (UTC)
Why go back that far? The US Penny has long since exceded 1 cent's worth of copper... Carbonate 17:04, 23 October 2006 (UTC)
Carbonate 04:43, 6 November 2006 (UTC)
Hello there Stirling Newberry, hope this version is more to your satisfaction. I actually don't find all that much of my previous addition to be "POV" as I was for the most part only quoting what other people had said. The splitting of the history of inflation into three periods isn't POV either; it's based on simply looking at the graph, which goes slowly down from 1257 to 1717, stays flat from 1717 to 1933, and then drops like a rock. My graph is as far as I know original work, but from public sources, and I think it is relevant; I haven't seen anything published over as long a time period as that anywhere else (maybe back to the 1600s somewhere). -- Mika
131.215.242.164 08:54, 28 December 2006 (UTC)
Wikipedia is not a place for original research, nor for POV essays. The history of inflation is a matter of a great deal of research and dispute. "The Graph" is not an objective fact, but an interpolation based on rather complex research and a number of assumptions. Other charts of historical inflation lead to very different conclusions. I've reverted again because it is still uncited, original research POV. And bad research at that.
Stirling Newberry 23:10, 28 December 2006 (UTC)
Maybe your standards for "complex research" are different from mine? Are you objecting to the correlation of the price dips with the historical events? The graph of the gold price in English
pounds/English pound price in grams of gold is not very complex research, as it is simply a juxtaposition of three time series: the English government "official gold price", a time series of the market gold price in London, and recent data from xe.com. I can certainly generate proper references for this data if it helps any. My goal was to add some information on historical inflation levels, and I know of no other time
series that could express them over as long a time period. The gold price is definitely an imperfect way of measuring inflation, no one would argue with that. But this is about the only
time series you can find anywhere that sheds any light on inflation over such long time spans. In any case I think the article is incomplete: you say the history of inflation is "a matter
of a great deal of research and dispute"---does that disqualify it from Wikipedia?
Based on the paragraphs that I wrote and you reverted I am sure you can tell that my goal was to express to the reader that while inflation or currency debasement is nothing new, the slow, unrelenting erosion of the value of the currency is a modern phenomenon, essentially limited to the 20th century (maybe the 21st too). I have never seen data to contradict this statement and would respectfully add that any article on inflation is incomplete without this observation.
131.215.242.164 10:51, 30 December 2006 (UTC)
A user designated 146.115.40.86 deleted the section of this article called Measures of inflation. I have restored this section and am now asking for discussion: Should this section stay or be deleted? My vote is "keep." ProfessorPaul 00:52, 7 January 2007 (UTC)
I think it an important inflation-related concept. __earth ( Talk) 14:26, 24 January 2007 (UTC)
"Other theories, such as those of the Austrian school of economics, believe that an inflation of the general price level and of specific prices is a result from an increase in the supply of money by central banking authorities." This is wrong. Austrians define inflation as any increase of the money supply over specie. Pricing levels have nothing to do with this. Intangible2.0 16:30, 5 February 2007 (UTC)
The subsection on the Austrian view was indeed arguably overly long (and it contained a perfectly egregious confusion of word with concept in its use of “inflation”). But the reduction “in relation to influence” was quite inappropriate. The Austrian view very much informed mainstream economics. That influence has been somewhat disguised by the way in which, during the Keynesian hegemony, there was an attempt to write the Austrians out of the history of thought. But a real familiarity with the primary sources (including Keynes's General Theory!) would know better. — SlamDiego 06:49, 15 February 2007 (UTC)
Okay, what I have now written is at least an accurate representation of the Austrian School in general, as opposed to focussing upon beliefs that are both peculiar to a sub-camp and secondary in importance even within that sub-camp.
The section is still not proportionate in size to the influence that the Austrians have had on economic thought. One way of legitimately increasing that section size would be to note the effects on the thinking of Keynes and of others that the Austrian theory had. (The reader should not be greatly surprised to learn that Keynes, in his General Theory, explicitly mentions that it was from v. Mises that he learned that “nominal” values could have real effects. &c.) — SlamDiego 03:39, 16 February 2007 (UTC)
Definitions of terms for things that exist outside of theory — such as inflation — should be presented without avoidable theoretical baggage. There is certainly no need to presume that one can write meaningfully about “the price level” in order to define “inflation”. (It's quite appropriate to discuss the mainstream theoretical view in the body of the article, which discussion should surely involve one of and in terms of a price level.) There is, BTW, nothing peculiarly Austrian in rejecting the notion of the price level. — SlamDiego 00:50, 16 February 2007 (UTC)
Hipocrite is objecting to mention of the original definition of “inflation” in the lede. His claim was that this was part of “undue weight provided austrians in the header”. Now, I am not wed to mentioning the original definition in the lede, but:
— SlamDiego 01:09, 16 February 2007 (UTC)
The subscetion entitled “Hedonic adjustments to measuring inflation” contains two paragraphs. The second of these, possibily with some further clean-up, belongs somewhere in this article, but it does not belong in that subsection. — SlamDiego 04:54, 23 February 2007 (UTC)
MikaNystrom effected a change to the section on the Austrian School which replaced
with
In effecting this changes (and other changes) MikaNystrom declares
Now, first and foremost, MikaNystrom seems to have lost sight of the subject of the article — general increases in prices. There is no point in having a section on the Austrian School if if does not focus upon that. Yet MikaNystrom had removed the explanation of such increases from the section!
The Austrian School does not merely emphasize real changes rather than nominal changes; it rejects the classical dichotomy. But that doesn't change the fact that this section either needs to give the Austrian School explanation for general increases in prices, or to be removed from the article as quite tangential! Moreover, the section already explicitly noted:
(Since this article is not itself about such things as business “cycles”, there is a limit to the extent that such concerns should be labored in this article.)
To the sentence
MikaNystrom appended
The sentence had not claimed that the increases in demand would be uniform or universal; and, again, the section had gone on to state that the process
I can look at tweaking this point to make it more explicit; but it is here that the exposition does and should address a point secondary to the subject of the article.
MikaNystrom's claim that “The statement that Austrians believe prices will increase when money is added to the economy is untrue” is at best misleading, on multiple levels. A thorough analysis would probably be book-length. — SlamDiego 13:05, 6 March 2007 (UTC)
The Austrians get a more than generous share of attention here on wikipedia - there is systematic bias of overcoverage of "supply side" and "austrian" economics. The long term inflation claim is emprically false and a disservice to our readers to insert - long term falls in the price of money are well known to long periods of history.
Stirling Newberry 11:31, 7 March 2007 (UTC)
I wish to add the following two sentences after the first sentence in the introduction on inflation.
"Inflation has a monetary and a non-monetary consequence under the current Historical Cost Accounting paradigm. Its monetary consequence is the destruction of the internal real value of all monetary items over time in an economy subject to inflation. The non-monetary consequence is the destruction of the internal real value of all constant real value non-monetary items (eg. retained income) valued at Historical Cost and not fully or never updated as a result of the application of the stable measuring unit assumption."
Reference:
Smith, Nicolaas J., RealValueAccounting.Com - The next step in our fundamental model of accounting, Lisbon, RealValueAccounting.Com, 2005. ISBN 972-9060-06-1 (Paperback) [7]
How does the process of authorization for additions to the inflation article work? Is this addition acceptable? Who can give this authorization?
Nicolaas Smith 18:32, 14 March 2007 (UTC)
Thank you AnonEMouse.
I also feel I should rather find a place for it in the article body. I will work on that.
Nicolaas Smith 18:50, 14 March 2007 (UTC)
The only information on the effects of inflation comes under "problems of inflation" and it is very poor. I think that the effects of inflation should be a large component of this article.
Are you suggesting I put the monetary and non-monetary consequences of inflation under "problems of inflation"
Nicolaas Smith 07:51, 15 March 2007 (UTC)
I suggest you delete the "problems of inflation" paragraph altogether
Yes, you are rigth. It is a very weak paragraph. Problems of inflation can also be seen as the core of the inflation article. Especially when it is realized that inflation was always and everywhere and is always and everywhere the destruction of real value in monetary items of any kind and non-monetary items not updated or not fully updated over time. Problems of inflation should, in fact, be the bulk of this article and not the hardly non-existent paragraph it is now. Everybody fights inflation because of the problems of inflation. Strange is it not. What inflation is really all about hardly appears in this article.
Nicolaas Smith 18:56, 19 March 2007 (UTC)
Should there be a section that discussed inflation in pre-modern times? Historically issues like debasement of coinage had significant economic impact and often resulted in inflation.
-- LeperColony 18:20, 24 May 2007 (UTC)
I found nothing on asset price or capital goods price inflation. WHy all this focus on the rise of consumption goods forgettting the inflation in asset prices ? for some articles about asset price inflation http://www.nber.org/papers/W9321 http://www.dbresearch.com/PROD/DBR_INTERNET_DE-PROD/PROD0000000000210917.PDF http://people.brandeis.edu/~cecchett/pdf/assetdfi.pdf
It s especially damaging since the last 20 years have seen low consumption goods inflation and high asset price inflation in the face of high monetary creation.
"In mainstream economics, the word “inflation” refers to a general rise in prices measured against a standard level of purchasing power.
A standard level of purhcasing power. What a strange way of putting it. Needs to be simplified.
Chimbwidz 13:18, 1 July 2007 (UTC)
Jayrandom 03:55, 7 July 2007 (UTC)
Joeblogger 07:22, 7 July 2007 (UTC)
Miss World 09:28, 7 July 2007 (UTC)
Miss World 09:36, 7 July 2007 (UTC)
Miss World 10:03, 7 July 2007 (UTC)
Gideongono 11:10, 7 July 2007 (UTC)
I am asking permission to add only that:
The Historical Cost paradigm which incorporates the universal stable measuring unit assumption results in inflation having two components: a monetary component and a non-monetary component.
Yes, exactly. The second component of inflation is caused by HCA. No HCA = no stable measuring unit assumption = no second component: only destruction of value in money or the first component. Inflation has two components. A monetary and a non-monetary component. The monetary component, cash inflation is always and everywhere a monetary phenomenon.
The non-monetary component is caused by application of the stable measuring unit assumption in HCA. As such HCA causes the second component. The proof of that is that the Brazilian Unidade Real de Valor that revoked the stable measuring unit assumption in the valuation of all non-monetary items during their last period of hyperinflation eliminated the second or non-monetary component of inflation in Brazil during that period.
Thus with HCA and the stable measuring unit assumption you have non-monetary inflation that destroys the real value of constant real value non-monetary items not fully or never updated. Without the stable measuring unit assumption as it was revoked under the Unidade Real de Valor you do not have non-monetary inflation - it is impossible to happen - it cannot happen: constant real value non-monetary items´ real values are maintained because their nominal real values are continuously updated in terms of the inflation rate in low inflationary economies and in terms of the parallel rate in hyperinflationary economies under real value accounting or also an Unidade Real de Valor in hyperinflationary economies
See the explantion given over here: [ [8]] under Requestion permission to add non-monetary hyperinflation.
Because constant real value non-monetary items have constant real values but depreciating monetary values, namely they are valued in terms of a depreciating or hyper depreciating monetary unit of account, the destruction of the real value of money is passed along from the the monetary unit of account (money) to constant real value non-monetary items via the application of the stable measuring unit assumption in HCA. When you assume money is stable and in fact it is never stable, then you permanently destroy the real value of all constant real value non-monetary items NEVER updated. That is simple logic.
That happens and has always happened to the real value of all retained income balances in all companies´ balances sheets. Not just in their balance sheets but in their businesses. That real value is permanently destroyed - permanently taken out of the economy, never to be recuperated. You can recuperate some under deflation, but that is a dangerous game that everyone is scared of.
The real value of all retained income has always been permanently destroyed in low inflationary economies, because it is impossible to update the real value of retained income under HCA. Its real value is thus being permanently destroyed by low cash inflation just like in cash in all low inflationary economies. This results in the annual permanent destruction of at least USD 30 billion in the real value of the 30 Dow companies´ retained income balances - all of it possible dividends to shareholders permanently destroyed. Each and every year. The value must run into hunderds of billions of USD world wide each and every year as over the past 700 years. Not so much in the beginning, of course.
Once in hyperinflation companies are suddenly allowed to update retained income. But only while in hyperinflation with IAS 29. Once out of hyperinflation, like Turkey, companies are forced by HCA to destroy the real value of their retained income again - as has been happening for the last few hunderd years and is happening this very moment in all companies in the low inflation world. Sad but true.
D´Artgnan 10:37, 9 July 2007 (UTC)
How can we put this article a disputed form. You are not the sole jugdge of Wikipedia policies. I note that you add large items in articles without first discussing them. That is a rule you only apply to others.
Where can I find out how to put this article in dispute? You are adding large sections to the article while items are still in dispute. I think that should stop till the dispute is settled.
D´Artgnan 11:43, 9 July 2007 (UTC)
Please stop putting items like the following in this discussion when all you are interested in is a reference:
"Given that Milton Friedman's comment that "inflation is always and everywhere a monetary phenomenon" is widely-known (as well as many critiques of that comment), this statement should be referenced.
Why did you waste your and my time asking these questions?
All you want is a reference.
Answering all of that was just a waste of time.
Just requiring references sorts out this whole dicussion page very neatly. I think the page should be renamed References Please.
I will suggest this to Wikipedia.
When I find those references I am 100% sure that you still will not add to Wikipedia that Historical Cost Accounting destroys value.
That is the main reason why this article should go into dispute to take it out of your sole power.
D´Artgnan 11:50, 9 July 2007 (UTC)
To all other editors: Please be reminded that stating anything on here without a direct reference saying exactly what you are saying is a waste of time.
D´Artgnan 12:20, 9 July 2007 (UTC)
Where can I find out how to put this article in dispute?
D´Artgnan 11:41, 9 July 2007 (UTC)
Also the guidelines for dispute settlements ;)
That reputable source also tells the world that trade debtors and trade creditors are monetary items when they have been updated by Brazil for years and years and years and years using their URV. So, there is you reputable PricewaterhouseCoopers not so reputable about hyperinflation when 180 million Brazilians can tell them they are completely wrong as far as trade debtors and trade creditors are concerned: Bottom of page 7 in that link you got on wikipedia and then removed. Please be so kind as to put it back.
You will very conveniently ignore the facts stated above. Oh yes, you want a reference. The reference is the same as the refrence to the paragraph you have added to the article - the one you have removed from wikipedia articles.
D´Artgnan 11:59, 9 July 2007 (UTC)
All this will just be a waste of time with you. Even when the references appear on here you cannot put them on can you?
D´Artgnan 12:01, 9 July 2007 (UTC)
The above is written proof that your comments on here are not unbiased. I explained to you that HCA causes non-monetary inflation. But you keep on stating as you state right here that in am saying inflation is caused by HCA. Where did I say that? I think it is very clear to anyone who reads this discussion about this matter that I state that non-monetary inflation is caused by HCA and not just inflation in general. That is very clear form the above. If you cannot see that, after all this time, then it is best you go and get involved in a nother subject or article. Pretending you do not understand is not the quality that is required here.
You make the point of leaving out the word non-monetary inflation, apparently to ridicule me and to characterise me as a person that says that normal cash inflation, as everyone knows it, is causes by HCA. I must be an idiot saying something like that. That is what you imply by simply writing I say that inflation is caused by HCA.
Gregalton your insulting way of dicussing this is certainly going to get rid of me. I don´t come here for your insults.
D´Artgnan 12:36, 9 July 2007 (UTC)
Gregalton you are exactly like those people on the forums: when they are proven wrong they start insulting. Congratulations.
D´Artgnan 12:54, 9 July 2007 (UTC)
No, I made a mistake. There is only one type of inflation. Just inflation. No, I cannot give a concise definition. No, I cannot give a reference. You are right. There is no such thing as non-monetary inflation.
You are a very nice and kind and well mannered person. You are very intelligent and an absolute gentleman. You do everything in good faith. No, I cannot give any references at all. I am sorry. Please excuse me. I am sorry. Thank you. Please excuse me. I am sorry.
D´Artgnan 14:27, 9 July 2007 (UTC)
Oh yes. I also agree with you that pigs can fly.
D´Artgnan 14:47, 9 July 2007 (UTC)
Gregalton I don´t come here for your insults.
I do not think you are the right person to be involved in this article.
D´Artgnan 13:10, 9 July 2007 (UTC)
Withdrawing request to add the two components of infaltion. Gregalton proved to me that that is wrong.
The Historical Cost paradigm which incorporates the universal stable measuring unit assumption results in inflation having two components: a monetary component and a non-monetary component.
He also proved to me that there is no such thing as non-monetary inflation and that the Historical cost accounting model never destroyes value. He is a genius.
He is right. He knows better.
So, request withdrawn.
D´Artgnan 17:24, 9 July 2007 (UTC)
This page is an archive of past discussions. Do not edit the contents of this page. If you wish to start a new discussion or revive an old one, please do so on the current talk page. |