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Keith, I think you have it right, though I must admit
to not being a cosmologist.
Ed
----- Original Message -----
Sent: Tuesday, January 13, 2004 9:08
AM
Subject: Re: Slightly extended (was Re:
[Futurework] David Ricardo,CavemanTrade vs. Modern Trade
Ed,
At 08:22 13/01/2004 -0500, you
wrote:
"urn:schemas-microsoft-com:vml"
xmlns:o = "urn:schemas-microsoft-com:office:office" xmlns:w =
"urn:schemas-microsoft-com:office:word" xmlns:st1 =
"urn:schemas-microsoft-com:office:smarttags">
Harry, I guess prices have not come down because the
money supply has increased more rapidly than productivity. The English
language has proven enormously flexible. Get used to it. If we
want to call rising prices "inflation", we can, though we know that the root
cause is an increase in the volume of money and credit in relation to
available goods. BTW, cosmologist also use the term to describe what
happened to the universe immediately after the big
bang.
Treading lightly in an area I don't know much
about, but I think cosmologists reserve inflation for a second acceleration of
the original bang a few milliseconds/minutes later. (I'm not so sure that I
believe in either of these actually!)
Keith
Ed
- ----- Original Message -----
- From: Harry
Pollard
- To: 'Ed Weick' ; [EMAIL PROTECTED] ; [EMAIL PROTECTED] ; [EMAIL PROTECTED]
- Cc: [EMAIL PROTECTED]
- Sent: Tuesday, January 13, 2004 3:47 AM
- Subject: RE: Slightly extended (was Re: [Futurework] David
Ricardo,CavemanTrade vs. Modern Trade
- Ed,
- Depends on what you mean by inflation.
- To repeat, inflation is a physical term meaning an
increase in volume. It was fine to use it with respect to an increase in
the volume of money. So, inflation (and deflation) were good words to use
to describe changes in the volume of money.
- One of the effects of increasing the volume of money (the
measure of value) is an increase in prices. Apparently economists
transferred the name �inflation� from the cause to the
effect.
- Then they had a problem. Other things can cause a price
increase � so prefixes arrived � such as �oil inflation� and �energy
inflation�. (Using inflation is both senses, perhaps there could be
�inflation inflation�.)
- You ask if I believe that there is no such thing as
inflation. In my sense (an increasing money supply), there always has
been, albeit a rare excursion into deflation.
- If you are asking me whether I think there has been a
continual increase in prices, then I must assert categorically there has
been.
- But, then I wonder. Productivity goes up all the time.
That should lead to lower prices. Why doesn�t it?
- Well, it must be the exorbitant profits of the
corporations and the extortionate demands of the unions. But, don�t worry,
the guvmint will fight inflation on our behalf. (Remember Ford�s
ridiculous �Win Inflation Now� � WIN.)
- And there is the problem. The original meaning of
inflation made it a government mistake. The segue to a meaningless
meaning has made it the fault of others.
- No wonder economics is in such a mess.
- Harry
- ********************************************
- Henry George School of Social Science
- of Los Angeles
- Box 655 Tujunga CA
91042
- Tel: 818 352-4141 -- Fax: 818
353-2242
- http://haledward.home.comcast.net
- ********************************************
-
- From: Ed Weick [mailto:[EMAIL PROTECTED]]
- Sent: Wednesday, January 07, 2004 5:54 AM
- To: Harry Pollard; [EMAIL PROTECTED]; [EMAIL PROTECTED];
[EMAIL PROTECTED]
- Cc: [EMAIL PROTECTED]
- Subject: Re: Slightly extended (was Re: [Futurework] David
Ricardo,CavemanTrade vs. Modern Trade
- Harry, are you saying that there is no such
thing as inflation and that it does not have economic
effects?
- Ed
- ----- Original Message -----
- From: Harry Pollard
- To: 'Ed
Weick' ; [EMAIL PROTECTED] ; [EMAIL PROTECTED] ; [EMAIL PROTECTED]
- Cc: [EMAIL PROTECTED]
- Sent: Wednesday, January 07, 2004 4:51
AM
- Subject: RE: Slightly extended (was Re:
[Futurework] David Ricardo,CavemanTrade vs. Modern Trade
- Ed,
- Inflation has been taken over by the economics
profession. In that sense - because they use it � it is an economic
term.
- What does it mean?
- Harry
- ********************************************
- Henry George School of Social Science
- of Los Angeles
- Box 655 Tujunga CA
91042
- Tel: 818 352-4141 -- Fax: 818
353-2242
- http://haledward.home.comcast.net
- ********************************************
-
- From: Ed Weick [mailto:[EMAIL PROTECTED]]
- Sent: Sunday, January 04, 2004 4:08 PM
- To: Harry Pollard; [EMAIL PROTECTED]; [EMAIL PROTECTED]; [EMAIL PROTECTED]
- Cc: [EMAIL PROTECTED]
- Subject: Re: Slightly extended (was Re: [Futurework] David
Ricardo, CavemanTrade vs. Modern Trade
- Harry, old friend, inflation really is an
economic term, and has been since at least the twentieth
century.
- Ed
- ----- Original Message -----
- From: Harry Pollard
- To: 'Ed
Weick' ; [EMAIL PROTECTED] ; [EMAIL PROTECTED] ; [EMAIL PROTECTED]
- Cc: [EMAIL PROTECTED]
- Sent: Sunday, January 04, 2004 2:40
PM
- Subject: RE: Slightly extended (was Re:
[Futurework] David Ricardo, CavemanTrade vs. Modern Trade
- Ed,
- As I asked Arthur, if your boss offered to double your
salary and quadruple the manager�s salary, would you refuse on the grounds
you wanted the quadruple too?
- I doubt it � and I doubt anyone else would either (unless
they had a special agenda).
- But, you bring in �inflation�. Oh,
my!
- And we have barely finished the discussion of the
non-economic term �profits�.
- Inflation is not (shouldn�t be) an economic term. It�s a
physical term meaning an increase in volume. When it referred to an
expansion in volume of the money supply, it had some
credibility.
- However, one of the effects of increasing the volume of
money is that its value decreases � as you would expect. So, more of it is
needed to buy something, which is another way of saying prices
increase.
- (A price is the value of something in terms of the
standard of value. Sorry, but these days, every word needs to be
explained.)
- So, the clowns who dictate modern economics took an
effect of the increase in volume and called it inflation. Thus any general
price increase is called inflation. As price increases may have many
reasons, �inflation� tends to get prefixes. Thus, we get �oil inflation�
and �coffee inflation� and my golly, �coffee deflation�. That means coffee
prices are dropping, but �deflation� sounds so much more
scientific.
- So, Ed old friend, you introduce inflation out of the
blue. Or, perhaps you expect the volume of �the measure of value� to
increase because that is economic policy. As it becomes harder to keep the
economy moving, there is greater temptation to inflate, to decrease the
value of the dollar. So inflation becomes the norm. (This deserves more
attention than I can give it � but evidence is immense that inflation is
used to keep the economy going. That�s the original meaning, which is what
I use. In fact, a recent history of British money showed that a (decimal)
penny in 1850 would buy almost 20% more than today�s pound. (One of the
arguments for the last increase in the US minimum wage was that it was
worth about a third less than when it was instituted.)
- So, inflation is a monetary phenomenon and describes an
increase in the volume of the measure of value. Using it to describe an
increase in prices not only makes it a useless word � it also squelches
any attempt to examine the problem � so they don�t.
- Harry
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Keith Hudson, Bath, England, <www.evolutionary-economics.org>
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