🚀 go-pugleaf

In article <2455@blue.cis.pitt.edu> wbdst+@pitt.edu (William B Dwinnell) writes:
>
>Okay, Norbert, let's say that we live in an economy where there is a bank
>which is willing to pay 5% interest on money deposited. If anyone at
>all deposits money in that bank, his nominal wealth will increase by
>5% iunxx in one year, right?  Let's say someone else does not. The depositor
>now has 5% more nominal wealth to play with than the non-depositor,
>and is thus more able to compete in the market than he was before, whreas
>the non-edpositor hasn't changed, in terms of nominal wealth. The
>demand curve will shift, moving the quilibrium point, dragging prices
>up with it. This is what I "know".  Where have I strayed?

the 5% simply represents rent for the use of an item. as such, it is
no different than the rent you pay for your apartment, or the salary
a company pays an employee to "rent" him or her. i don't want to get into
equilibrium points etc., but i think the issue is that singling out
interest rates as inflationary is invalid because they are just another
form of compensation for use of an asset, no more than any other.
to claim that interest is inflationary would be to suggest that every
other activity which results in an increase in nominal wealth is.

--
charles