Misplaced Pages

Revision as of 19:32, 27 May 2006

Template:Bounty Template:Bounty Note: A bit of older history of this page can be found in the history of Inflation (economics). The page has been on that title for quite some time; this page now has the history of that page, and vice versa. Andre Engels 20:03 27 May 2003 (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)

what is vss capital gains?

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 Misplaced Pages'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 added the quantity theory of money

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)

Controlling Prices

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 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)

Short for

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 and create a different «true» inflation page, i.e. monetary expansion.

--The HellCat 23:16, 28 October 2005 (UTC)

Inflation Poetry

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)

Gutza, wouldn't "goods in excess of consumption" lead to declining prices? Peter Johnson

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 12:41, 8 May 2006 (UTC)

POV

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.

Yes we know it's stupid and a "joke". But I think it should be there.--Jerryseinfeld 12:08, 30 Dec 2004 (UTC)

We are under an obligation to provide credible sources first. This one isn't credible. Stirling Newberry 19:24, 30 Dec 2004 (UTC)

money supply inflation and price increases

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)

Reasoning behind core inflation

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.

I found these sentence very informative since I have always wondered why they never include energy. The question is, what is the best way of handling this dynamic cost? Pulling them out is damn, especially form the bulk of inflation.

The core rate is nonsense. If you belive (incorrectly) that prices are inflation, how can you then justify leaving the most responsive products out of the calculation? Inflation is an increase in the supply of money and prices only reflect the reletive scarcity of that money. This is the difference between _cause_ and _effect_. Carbonate 13:42, 25 April 2006 (UTC)

The Mega Revert

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)

Striling Newberry - Your mega revert is a sign of laziness

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)

Real Meaning of Inflation

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.

• My understanding is that Prof. Friedman is the founder of the Monetarist school. Peter Johnson

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 07:47, 27 January 2006 (UTC)

er, my mistake. I was refering to consumer purchasing power, not inflation. The point I wanted to bring earlier was that since inflation in not real (ie nominal) it shouldnt affect consumer purchasing power. I somehow mistook purchasing power of money as purchasing power of consumer. __earth 04:42, 15 May 2006 (UTC)

There are three meanings of inflation and all of them are valid and correct. The three meanings of infaltion are:

• a fall in the purchasing power of money
• a general rise in price
• an increase in the supply of money (inflation of the money supply), (the symptom of which is both of the above).

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 bounty - inflation in action

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)

Question

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)

Consequences of Inflation?

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)

Opening para + NPOV

The current opening paragraph is:

In economics, inflation is simply an increase in the money supply. One common fallacy is that inflation is an increase in prices, when this is actually a consequence of an increase in the money supply.

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)

It still needs a lot of work, please help! Some NPOV issues:

• it's not "the government" that issues money. If you have to say, say it's the government or central bank, but even that's inaccurate in some economies.
• the scope of a currency doesn't always coincide with a country. The PRC has several currencies, and there are many currency unions.
• inflation is not bad. The neutral point of view is that inflation needs to be described with all its notable effects, and no judgment be made which of those are bad and which aren't.
• Gold is no longer money. It was money, or related to money, until the 1970s, but nowadays its use is limited to a couple of gold bugs.
• GDP growth is not good, and sustained economic growth is not a fact. There are many people out there who would like to see GDP per capita fall, for any number of reasons. There are also those who would like to see the population fall faster than GDP per capita rises.

RandomP 11:47, 14 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)

I don't know about the sovereigns story. I very much doubt it's true (it sounds like an urban legend).

Something being "rare and hard to get to" certainly doesn't suffice to make it money. At best, it gives it some rarity value.

I don't remember comparing the US dollar specifically to gold. If I were to do so, the main point I would make is that while US cash is obviously not something you want to hold for any length of time, there are better investments to make with US dollars than with gold. Frankly, though, I'd recommend you go with the British pound, Japanese Yen, or Euro, all of which have clear inflation targets ...

If gold is working as money, please tell me where I can get a credit denominated in gold? As far as I know, such a thing is totally nonexistent ...

So if the past 35 years can be ignored in favour of the previous 3,000, can we just go ahead and change the Internet article to say that, historically, the Internet doesn't exist, even though some people think that might have changed when it was switched on? Sorry for the analogy, but I see about as much merit in that argument as in yours.

35 years ago, it became, overnight, virtually impossible to take out a loan in (what translated to) gold. That's certainly something you'd expect to be able to do with money ....

RandomP 13:34, 27 May 2006 (UTC)

What is inflation all about?

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)

I've removed the above section again. Please do not readd without discussion. RandomP 16:43, 19 May 2006 (UTC)

And I've taken it out again. When it gets re-added, as begins to seem inevitable, please note that it is a copyvio from . -- Mwanner | Talk 21:27, 20 May 2006 (UTC)

Gold

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)

Respectfully, I disagree. Yes, gold is valuable, and has been so in most situations for a significant period of time. However, what is considered "valuable" is subject to change - while I have no detailed statistics, it seems fairly clear that spices, aluminium, salt, steel, and small diamonds were once considered much more valuable than now, and crude oil, much less.

I certainly don't think you could use (physical) gold to buy a meal or a pair of shoes today - I would be very suspicious if you tried, at least, and wouldn't know how to verify what you offered was indeed real gold. However, if the proper verification were offered, I'd accept sufficient amounts of quite a few metals - 10 kg of copper would do just fine for the shoes I'm wearing!

There are many gold coin being minted which identify the quantity and quality of gold. Carbonate 00:40, 27 May 2006 (UTC)

And I wouldn't trust any of them, thank you very much. Maybe you know how to verify easily whether a coin that looks like gold is real or not, but I don't. I believe it's actually impossible to do that without destroying the coin ... RandomP 13:17, 27 May 2006 (UTC)

I personally don't think gold has any 'forever' value, really. Ultimately, there is a lot of gold on earth, more than anyone would ever know what to do with. While I have no idea how many years precisely it will be before someone comes up with an easy way of extracting all that gold, I'm convinced it'll happen. But, hey, if your personal opinion differs, that's a good thing: that way, we can make sure that wikipedia doesn't take either of our personal points of view, and gets closer to the neutral point of view.

RandomP 18:15, 25 May 2006 (UTC)

The crust of the earth is 10% iron, but that does not mean iron is of no value. Gold must be mined and that requires labour at the very least (see the section on Labour as a measure of inflation) as well as discovery of feasably minable resources (see Hubbert peak theory. If one considers forever to be all that has been, then gold has already been a forever store of wealth as it has outlived every other form of money. You are correct in questioning the future, but I can assure you that the USD will not be a forever measure so what is left other than gold (and labour)? As for the absolute quantity, consider that the entire market capitalization of the entire gold sector is less than many large companies.

Carbonate 00:40, 27 May 2006 (UTC)

I believe in the existence of something called the future. So, no, forever isn't just "all that has been". As for labour required to mine gold, sorry if I wasn't clear that I believe it's entirely possible new technologies will drastically reduce the labour and energy requirements of mining gold. As I said above, personal opinion. RandomP 13:17, 27 May 2006 (UTC)

I'm glad to hear you reiterate that this is your opinion. As such, it is not appropriate to express it in the article under the gold section. The gold as a measure of inflation is for that purpose and I would appreciate it if you would refrain from diluting the content of gold as a measure of inflation to "gold is just a worthless metal and inflation can't really be measured anyway so there". Carbonate 19:32, 27 May 2006 (UTC)

Labour

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)