flix on Nostr: Remember that from 1865 to 1983 INFLATION was defined as: “An increase in the ...
Remember that from 1865 to 1983 INFLATION was defined as:
“An increase in the amount of currency in circulation, resulting in a relatively sharp and sudden fall in its value and rise in prices"
Nowadays most economists accept the modern definition:
"inflation is a general increase in the prices of goods and services in an economy".
There is a strong political reason behind that change.
The classical definition was simpler, more measurable and shows cause and effect... which is the reason why they changed it. To avoid blame. For entirely political reasons.
"Rising prices" are hard to measure in a standard way. There are hundreds of ever changing and easy to manipulate "baskets of goods" considered for CPI, PPI... and other modern "inflation metrics".
Money is FUNGIBLE so any arbitrary basket of goods used to measure CPI will always show only a small subset of prices affected by rising money supply.
...that is made even worse by the fact that they keep adjusting and changing the baskets...
With the classical definition it is easy to see who is responsible: the issuer of currency.
But that lays the blame for runaway inflation too clearly at the feet of central banks. That is not something that they want.
An honest academic, seeking truth, would never accept such a politically motivated change of definitions. Especially from a clear, simple metric that anybody can empirically measure to one that is a moving yardstick defined by authority.
It's anti-scientific to rely on authority for your measuring stick. Mathematicians would revolt against a redefinition of litres, meters, degrees.
Unfortunately too many economists are in the pay of governments.
A recent and very welcome development that we can thank Bitcoin for is the popularisation of the term "fiat money" and also the use of the classical definition of inflation.
Everybody talks about Bitcoin inflation as an increase in supply.
Sites like https://fiatmarketcap.com even compare Bitcoin to fiat currencies in terms of money supply.
"The Fiat Standard" by saifedean (nprofile…jt2p)
includes a good exploration of how academic economists were corrupted and bought by money printing governments.
“An increase in the amount of currency in circulation, resulting in a relatively sharp and sudden fall in its value and rise in prices"
Nowadays most economists accept the modern definition:
"inflation is a general increase in the prices of goods and services in an economy".
There is a strong political reason behind that change.
The classical definition was simpler, more measurable and shows cause and effect... which is the reason why they changed it. To avoid blame. For entirely political reasons.
"Rising prices" are hard to measure in a standard way. There are hundreds of ever changing and easy to manipulate "baskets of goods" considered for CPI, PPI... and other modern "inflation metrics".
Money is FUNGIBLE so any arbitrary basket of goods used to measure CPI will always show only a small subset of prices affected by rising money supply.
...that is made even worse by the fact that they keep adjusting and changing the baskets...
With the classical definition it is easy to see who is responsible: the issuer of currency.
But that lays the blame for runaway inflation too clearly at the feet of central banks. That is not something that they want.
An honest academic, seeking truth, would never accept such a politically motivated change of definitions. Especially from a clear, simple metric that anybody can empirically measure to one that is a moving yardstick defined by authority.
It's anti-scientific to rely on authority for your measuring stick. Mathematicians would revolt against a redefinition of litres, meters, degrees.
Unfortunately too many economists are in the pay of governments.
A recent and very welcome development that we can thank Bitcoin for is the popularisation of the term "fiat money" and also the use of the classical definition of inflation.
Everybody talks about Bitcoin inflation as an increase in supply.
Sites like https://fiatmarketcap.com even compare Bitcoin to fiat currencies in terms of money supply.
"The Fiat Standard" by saifedean (nprofile…jt2p)
includes a good exploration of how academic economists were corrupted and bought by money printing governments.