raghu wrote: > In that case it is a logical fallacy in Keynes, because he uses inflation to > indicate the quality of the "measuring rod" not cost of living. Or am I > missing something?
it's not a fallacy as much as being a matter of definition. Macroeconomics _defines_ inflation in terms of the rise of the prices of newly-produced goods and services. Similarly, one can _define_ a measuring rod in terms of the prices of newly-produced goods and services. The "measuring rod," it seems, refers to money's role as a unit of account. It is then used to calculate the "real value" (in terms of purchasing newly-produced goods and services) of financial assets. How many Lexi can you buy with your stock holdings? One of the problems is that financial assets are, strictly speaking, nothing but claims on real goods and services (now and in the future). You don't want to "double count." So it's best to keep real goods & services inflation or deflation conceptually separate from asset-price inflation or deflation. That doesn't mean that either should be ignored. -- Jim Devine / "Segui il tuo corso, e lascia dir le genti." (Go your own way and let people talk.) -- Karl, paraphrasing Dante. _______________________________________________ pen-l mailing list [email protected] https://lists.csuchico.edu/mailman/listinfo/pen-l
