You know what really grinds my gears?
Hearing people say a supply disruption causes "inflation". No. A drop in supply causes higher prices, but higher prices are not inflation, they are a *symptom* of inflation. Lower supply and constant demand is just market dynamics.
Inflation is the expansion of the money supply in excess of the production of goods & services.
This isn't my personal definition, nor is it some fringe theory... here's an entire article from the Federal Reserve supporting this definition.
https://web.archive.org/web/20080819185226/http://www.clevelandfed.org/research/Commentary/1997/1015.pdf
It just grinds my gears to hear people conflate higher prices and inflation, as if expanding the money supply has no effect of this.
Don't belittle people for making this mistake. Educate them. If they disagree, citing CPI as the way we measure inflation, that's a fair point. However, if inflation is being defined as strictly higher prices, then measuing it should include things like home prices, life insurance, energy, and everything else that people spend money on.
Another thing to consider is whether they believe we would be suffering from inflation if prices and wages grew at the same rate. Prices would be higher, but things would not be any less afordable. Calling that inflation wouldn't really mean anything. The term is really a lot more synonymous with "affordability" than "higher prices".
Hearing people say a supply disruption causes "inflation". No. A drop in supply causes higher prices, but higher prices are not inflation, they are a *symptom* of inflation. Lower supply and constant demand is just market dynamics.
Inflation is the expansion of the money supply in excess of the production of goods & services.
This isn't my personal definition, nor is it some fringe theory... here's an entire article from the Federal Reserve supporting this definition.
https://web.archive.org/web/20080819185226/http://www.clevelandfed.org/research/Commentary/1997/1015.pdf
It just grinds my gears to hear people conflate higher prices and inflation, as if expanding the money supply has no effect of this.
Don't belittle people for making this mistake. Educate them. If they disagree, citing CPI as the way we measure inflation, that's a fair point. However, if inflation is being defined as strictly higher prices, then measuing it should include things like home prices, life insurance, energy, and everything else that people spend money on.
Another thing to consider is whether they believe we would be suffering from inflation if prices and wages grew at the same rate. Prices would be higher, but things would not be any less afordable. Calling that inflation wouldn't really mean anything. The term is really a lot more synonymous with "affordability" than "higher prices".
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