🚀 go-pugleaf

In article <1993Jan22.040507.5588@csi.uottawa.ca> cbbrowne@csi.uottawa.ca (Christopher Browne) writes:
>In article <1993Jan21.211300.8065@athena.mit.edu> cmk@athena.mit.edu (Charles M Kozierok) writes:
>>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.

yes. but the market then acts to correct it. how can the market correct
for a government running the printing presses? that is an open loop.

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

i said "equilibrium, or at least a stable cycle", meaning, a controlled
oscillation akin to how a thermostat works.

>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.

true.

>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.

well, the higher inflation is, the more you want that dollar today.
but if you have a deflationary scenario, you would want that dollar
later, not now.

>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.

it sounds like you are confusing inflation with interest. having
a dollar now rather than later is good because you can lend it. 
any inflation which exists erodes this, which is why inflation and
IRs move together (roughly).

--
charles