🚀 go-pugleaf

In article <1993Jan21.211300.8065@athena.mit.edu> cmk@athena.mit.edu (Charles M Kozierok) writes:
>In article <2259@blue.cis.pitt.edu> wbdst+@pitt.edu (William B Dwinnell) writes:
>>Yes, some inflation is natural, and some is caused my economic policies
>>of the government. But why do you limit your explanation of inflation
>>to the eexxx effects of money, and supply and demand?  The reason for 
>>inflation happens before we even get to the market: the seller has 
>>forsaken some amount of value of the item in question, by waiting-
>>that is, by sliding through time. When the xxxx they finally get to
>>the market, supply and demand schedules have already moved, and the
>>seller has lost.  In truth, inflation of prices could occur in an economy
>>of hammers and banaanaxxxx bannanas. Remember supply and demand only
>>reflect underlying economic conditions, and the reason for inflation
>>is one of those conditions, not part of S/D.
>
>i really don't understand what you are trying to say here.
>inflation simply means an increase in prices. if the price of hammers
>in terms of bananas increases, then there is "price inflation"
>of hammers in terms of bananas. but that would only happen due to
>market effects. and when the number of bananas needed to buy a hammer
>increased, people would start making more hammers and growing fewer
>bananas. eventually an equilibrium, or at least a stable cycle
>would be reached. you wouldn't see the inflation continue endlessly.
>
>please explain the point you are trying to make here.

A) Inflation that happens due to "market effects" is still inflation.

B) You're assuming that there will be a final equilibrium.  In a
dynamic system, there's no certainty of any final equilibrium.

C) Currency as currency has no intrinsic value; it is only valuable
when it is actually used.  Fiat currencies have no other value;
commodity currencies may have some alternative valuation.

The point is that money that is hoarded isn't terribly USEFUL; it's
only valuable when you actually buy something with it.

Is it not a truism that it is better to get $1 today than it is to get
$1 tomorrow?  I'd rather get the buck today, REGARDLESS of any
inflation.  That preference will in fact create a certain amount of
inflation.

The extent to which people prefer to receive money now as opposed to
later will create a latent amount of inflation.  It is sometimes
described as the "real" interest rate, and I hear that it's considered
to be between 3% and 6%.  This might be considered a "floor" that
indicates some basic level of inflation.

-- 
Christopher Browne                |     PGP 2.0 key available
cbbrowne@csi.uottawa.ca           |======================================
University of Ottawa              | Genius may have its limitations, but
Master of System Science Program  | stupidity is not thus handicapped.