What is inflation and what causes it?

That's purely a guess on your part.
What if demand of eggs is so much that fish exchange remains the same?
Or increases because eggs are wanted so much.

It's mostly about supply vs demand.

 

And in that thread you could not explain how both the price of a skin and wine could go up at the same time. In a barter economy with two goods (squirrel skins and wine). The price of one is reflective of the price of the other.

 

Well, in a non-monetary economy with two goods (eggs and fish) there has to be some exchange rate between them. How could the price of one go up without the price of the other go down?

 

I've explained it best I could.
Supply vs demand

 

Yep, we know about supply and demand. So let's say we have our non-monetary barter economy that has two goods: eggs and fish. Let's say that right now a fish costs 2 eggs which means an egg cost 1/2 a fish.

The question is can the price of both eggs and fish rise at the same time? If so, how many eggs would a fish cost and how many fish would an egg cost?

 

If there's no outside influences and no supply or demand changes, they could remain stable.
But in life, the only constant is change.

 

Yes, I did explain it, but you either did not comprehend it, or just didn't want to admit being wrong.

 

Yes, supply side problems can drive up prices faster than anything, as was seen after covid when price of lumber went from $400 to $1600 very quickly. As soon as supply side was fixed, the prices returned to normal levels. And yes, THAT IS how inflation is measured. It is not a measure of money supply. Money supply is measured in M1, M2, M3, and M4

 

Okay, so let's say supply or demand changes. Pick a new exchange rate between eggs and fish. Do the prices of both move in parallel, or inverse of each other?

 

You explained how the price of squirrel skins (as measured in wine) and wine (as measured in skins) can BOTH go up?

That wold be mathematically impossible.

 

No, I explained how the purchasing power of the skins decreased.

 

You explained how the exchange rate between skins and wine changed. Remind me again. At first a skin cost 1/2 bottle of wine? And then it cost a full bottle? So the price of skins went down and the price of wine went up. No OVERALL price increase.

 

Again? Why does everything have to be repeated to you? Its annoying.

Its called inflation, but you are free to call it anything you want.

 

At first a skin cost 1/2 bottle of wine. And then it cost a full bottle. So the price of skins went down and the price of wine went up. No OVERALL price increase.

 

Already discussed overall increase. Not going to repeat.

Its inflation, but you are free to call it anything you want.

 

The price of one thing went up and the price of another went down. It's not inflation.

 

Already discussed overall increase. Not going to repeat.

Have a nice day

 

You don't have to repeat anything. I'm just debunking your idea that if the price of skins goes down and the price of wine goes up then that is inflation. It's not. It's just a change in prices.

 

I think that's kind of disingenuous. If the money supply is not increased, then wage growth only comes at the expense of some other part of the economy, in terms of just the distribution of unit amounts of currency. Which would probably not drive price increases.
If it is just the economy that grows (without expansion of the money supply) then there will be deflation and each unit of currency will be able to buy more.

I think what you are getting confused about is that inflation can eventually drive some wage increases (trying to compensate), which then contribute to more inflation.

 

That is a very good question, one that should really get people on the other side thinking.

 

Sorry if you don't like it, but its factually correct.

Its possible to have inflation without increase in money supply, although I think we all know the money supply does increase regularly in in a fiat monetary system.

No, I meant what I said and I am not confused, and nor is it my personal opinion. It is called Wage-Push inflation.

What Is Wage Push Inflation?
https://www.investopedia.com/terms/w/wage-push-inflation.asp
Wage push inflation is an overall rise in the cost of goods and services that results from a rise in wages. To maintain corporate profits after an increase in wages, employers must increase the prices they charge for the goods and services they provide. The overall increased cost of goods and services has a circular effect on the wage increase; eventually, as goods and services in the market overall increase, higher wages will be needed to compensate for the increased prices of consumer goods.

What is the 'other side' in a discussion like this? Does everything have to be "us vs them" in your life?

 

The definition of inflation has been corrupted purposefully by government over the years and even economists go with the corrupt definition these days. True inflation is the reduction of the value of the currency caused by government increasing the money supply. It is inflation of the money supply. It has nothing to do with prices whether payment is with cash, electronic transactions or barter. Prices result from the relationship between supply and demand. Yes even economists will tell you that.

Supply and demand are also the vehicle for true inflation. Increasing the supply of anything makes prices or the value of money decline. Government likes to throw consumer prices in with true inflation to hide the fact that it is reducing the value of money. They do it avoid taxation. They do it to pay down the debt with cheaper dollars. They monetize the debt to raise money for debt repayment thereby reducing the dollar's value. Federal government spending is the most serious problem facing the U.S. today.

 

Before being obfuscated by government, inflation was nothing more than inflation of the money supply. Combining prices with true inflation is the obfuscation the government supports to hide what it does with the fiat currency.

In truth it should be described as increased prices resulting from an increase in demand. Supply and demand affect prices. Inflation causes people to use more dollars to buy something than before the money supply increase. It may seem to be nit picking but it isn't. Inflation is caused by government. Pricing is caused in the economy by the rule of supply and demand. We would do ourselves a favor by not combining the two under one definition. It allows us to bare government's role.

 

Its not a government conspiracy, its economics.

 

LOL. Economics, a social "science" that has its adherents disagreeing with each other about almost everything. It isn't a government conspiracy. It is normal daily activity for government. You yourself said that government increases the money supply. And indeed it does.