Something worth keeping in mind is that inflation used to only refer to monetary inflation, but is now after the Keynesian revolution a term which refers to both monetary inflation and price inflation interchangeably … almost as if it is intended to bring about as much confusion regarding the term as possible and prevent it from being a term about monitoring irresponsible money production. There already exists a word for 'price inflation' ("an increase in the general price level"): impoverishment.
"In addition to separating the price level from the money stock, the Keynesian revolution in economics appears to have separated the word inflation from a condition of money and redefined it [Upon whose request? Why at this moment specifically and not any time before? Was it really necessary?] as a description of prices. In this way, inflation became synonymous with any price increase. Indeed, Keynes spoke about different “types” of inflation, including income, profit, commodity, and capital inflation. Today, little distinction is made between a price increase and inflation, and we commonly hear reports of energy inflation, medical care inflation, and even wage inflation [and 'funflation' and 'greedflation' of course! Nothing suspicious at all about such demagogic '-flation' terms cropping up!]. Some go so far as to argue that the monetary definition forces the word to take on too specific a meaning [OK, just use another word then?]"
I don't know about you, but as a consequence of this interchangeability, I feel that it is hard to know what someone means when they write "inflation". I often assume that they mean "price inflation", but too often get suprised to see them refer to "monetary inflation" instead. It is for this reason that I have always written "price inflation/deflation".
Making inflation refer to both concepts has in no way helped in clarifying the public discourse. It really begs the question then why this happened when clearly one could just chosen another word for "price inflation", such as 'impoverishment'.
https://old.reddit.com/r/economy/comments/1dlgih9/the_term_inflation_was_initially_used_to_describe/
by Derpballz
8 comments
Theft by any other name would smell as foul.
It is helpful to remember that V = PQ/M
So inflation is dependent upon the velocity of money and the money supply. So there isn’t just one relationship, there are several so “inflation” is dependent upon other variables which can vary.
[https://en.wikipedia.org/wiki/Equation_of_exchange](https://en.wikipedia.org/wiki/Equation_of_exchange)
Many of our most important economic metrics have been corrupted, to the upside, from decades of redefinitions.
I agree that it can be confusing sometimes, but words change meaning over time. It’s not a sinister conspiracy specifically engineered by Keynes and a cabal of shadowy elites, it’s just a change in what people are focused on and how they describe it. I would suggest that the most common and acceptable delineation is to call price inflation simply “inflation”, and to refer to the “old” kind of inflation as monetary inflation. This seems to be the most commonly accepted and used semantic distinction – I certainly wouldn’t use “inflation” with the expectation that people will automatically understand it to mean monetary inflation, outside of specific ideological circles.
As for calling it “impoverishment”, that really makes no sense. Just because you have price inflation doesn’t mean people are getting poorer; on the contrary, real wealth and real GDP often go up with inflation. If we had some kind of perfectly idealized price inflation, where the price of everything in the economy went up with no actual effect on supply, then nobody has gotten poorer. If food costs go up 10% but so do my wages, I haven’t gotten any poorer, so it would really make no sense to call this “impoverishment”. And on the other side of things, I don’t think anyone can credibly argue that periods of sever deflation make us richer; again, on the contrary, deflation is usually associated with a destruction of real wealth, not an increase. So while I agree that the competing definitions of inflation are confusing, calling inflation “impoverishment” is not just misleading but borderline disingenuous.
The price level has grown by an order of magnitude over the last hundred years. In that period, the United States has grown from a significant global power to far and away the strongest and wealthiest economy globally. Would you really say that America as a whole is “impoverished” compared to a hundred years ago? I wouldn’t.
Money is a market good.
ALL inflation is the protection of or increase in, the…return on capital.
Capitalism is purposefully ill defined when it is capital’s capture of govt. Capitalism for 400 years has shown it be violent, treacherous, corrupt, enslaving, exploiting and all around enjoys an unquenchable greed.
And before the arrogant pushback on that, understand that at now time in history, has capitalism served society at large without being forced by govt.
Since Reagan’s evisceration of labor law and this $100 fine for Amazon violations is same denigration of labor rights.
This has caused since then, a $50 trillion transfer of wealth from labor to capital.
Between the end of the civil war and the start of the Fed in 1913 the USD actually deflated 35%. From the start of the Fed to the start of the petro dollar around 1973 the dollar inflated 349%. Since the petro dollar it’s inflated 604%. Nice system we got here.