Talk:Monetary inflation

inflation is always the central banker's fault

Alan Greenspan says: "Although many factors may affect inflation in the short-run, inflation in the long-run, it is important to remind ourselves, is a monetary phenomenon."; Jean-Claude Trichet: "because in the long run inflation is a monetary phenomenon"; Ben Bernanke: "Ultimately, inflation is a monetary phenomenon, as suggested by Milton Friedman's famous dictum."

Mervyn King:"Over the 30 year horizon 1968-98, the correlation coefficient between the growth rates of both narrow and broad money, on the one hand, and inflation, on the other, was 0.99." —Preceding unsigned comment added by 213.229.171.25 (talk) 12:43, 26 February 2008 (UTC)

Calling it a monetary phenomenon is an euphemism, a roundabout way of recognizing the monetary authorities' responsability for inflation. In a central bank-cartelised fractional reserve banking system, inflation is always the central banker's fault. --89.128.216.95 14:16, 29 June 2007 (UTC)

ECB Executive Board member Peter Praet: "If you print enough money, you get inflation. Always." 2016 http://www.reuters.com/article/us-ecb-praet-idUSKBN0UK0T820160106

Austrian

Actually the Austrian school does not believe that monetary inflation causes inflation, it believes that increase in the money supply is inflation. Money and Inflation

Milton Friedman, in "Money Mischief: Episodes in Monetary History", argues for a bimetallic standard on the grounds that the supply of two different metals is more stable than any single metal. A currency's stability is directly related to its monetary role as a "store of value"[1]. In an interview with Russ Roberts, Friedman has the following to say on monetary systems:

But that's why what you want—if possible—is a mechanical system. If there was any virtue to the gold standard, it was that virtue. Maybe you could create the same thing now. My favorite proposal really is a little bit more sophisticated—or less sophisticated if you want to look at it that way—than a straight increase in the quantity of money. I would—if I had my choice—freeze the amount of high-powered money. Not increase it.[2]

As the leading 20th century proponent of the Chicago School of Economics, Friedman et. al. were "intellectual heirs of the Austrian school of economics".

On these grounds I believe the last line under the heading "Monetary Inflation", which reads "while Austrian economics often calls for an end to fractional reserve banking and a return to some kind of gold standard." should be amended.

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I don't agree at all. There is a great rift between Chicago and Vienna on the issue of commodity currencies. Friedman argues for any mechanism which ensures slow monetary growth, in "Capitalism and Freedom" he even mentions a computer program or a mathematical rule. But he is always talking of a centrally planned, centrally controlled money supply. Austrians talk of commodity currency not only to stem inflation, but also to take monetary policy out of the hands of governments. Rothbard was a great proponent of Free Banking, while Mises was more for the old gold standard, but both considered a virtue of gold that it tied the hands of central banks or directly made them irrelevant.

FMS

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—Preceding unsigned comment added by 89.128.216.95 (talk) 23:29, 25 January 2008 (UTC)

Why is this article implying that it is only just some fringe Austrian economists who believe that "monetary inflation" is actual inflation? Before the 1980's, virtually every Webster's Dictionary defined inflation as an increase of the money supply, and many definitions even omitted any reference to price levels. According to the 1913 edition of Webster's dictionary: "Undue expansion or increase, from overissue; -- said of currency. [U.S.]". Why is there even a need to tie this understanding of inflation to Austrian Economists? Virtually, every economist was on the same page about this 100 years ago, to even include even John Maynard Keynes. For a neutral point of view, it should be mentioned that this is the classic definition of inflation. Jafeucht (talk) 15:49, 7 November 2022 (UTC)

References

Can someone re-write this in English, using correct mathematical punctuation?

M.V = P.T M = Money Supply V = Velocity of Circulation P = Price level T = Transactions or Output As Monetarists assume that V and T are fixed

Monetary inflation vs Inflation

Define inflation as rising prices and you’ll think that oil sheiks, credit cards and private businesses are the culprits and price controls are the answer. Define inflation in the classic fashion as an increase in the supply of money, with rising prices as a consequence, and you then have to ask the revealing question, "Who increases the money supply?" Only one entity can do that legally; all others are called "counterfeiters" and go to jail.

Nobel laureate Milton Friedman argued indisputably that inflation is always and everywhere a monetary matter. Rising prices no more cause inflation than wet streets cause rain. --213.229.171.25 (talk) 07:32, 4 March 2008 (UTC) inf

Uncle Miltie had his 15 minutes of fame. And "Only one entity can do that legally" is incorrect. There is a staggering array of ways that liquidity is today provided to corporations and investors. SPECIFICO talk 22:28, 7 November 2022 (UTC)

Politicization of the Term "Inflation"

Since central banks, or government treasury departments, directly cause inflation by debasing the national currency, these institutions have a vested political interest in redefining the term "inflation" as a rise in prices.

The reason the use of the word "inflation" has changed to mean "increasing prices" over the past 50-70 years is that Keynesian economics has been taught in universities around the world during the same time period. Keynes advocated creating economy growth by governments spending money they don't have. It is natural that the institutions that follow Keynesian policy have an incentive to blame inflation on something besides government policy. Thus the government defines inflation as an increase in the Consumer Price Index, instead of the increase of the money supply. The Consumer Price Index itself has been weighted to reduce the importance of food and fuel - the very sectors of the economy where the effects of inflation are always the most obvious.Cadwallader (talk) 21:08, 29 April 2008 (UTC)

That is exactly right, it should made clear that term "inflation" IS NOT the general rise in the prices. Inflation-term comes from the word inflate, meaning increasing (on purpose) the amount of circulating currency. However I tried to find ANY reliable source for that information and I couldn't. The general rise in prices is a mere consequence of irresponsible money issuence.--Dmitri 152 (talk) 17:14, 26 July 2016 (UTC)

Vandalism

It's been determined that Austrian School interpretrations are "fringe" but deserve to live on this separate page. Could editors please refrain from deleting material here, especially given that inflation has now been pared back. Thank you. —Preceding unsigned comment added by 118.208.191.253 (talk) 08:49, 9 September 2008 (UTC)

I don't agree it's vandalism. This article is supposed to be about monetary inflation, but goes on to effectively just rant about a bunch of stuff, rather than sticking to the term. Austrian school interpretations can be discussed on relevant pages, like Austrian school. It's not a free pass to just have "special" pages for Austrian interpretations. (Perhaps we could suggest establishing SpecialPedia for special thinking?)--Gregalton (talk) 09:22, 9 September 2008 (UTC)

Or perhaps we should find you a sand box of your own, so that you might keep yourself from destroying every economics article on WP?

Misessus (talk) 22:12, 15 September 2008 (UTC)

Specifics of inflation should probably remain here, but I'm going to suggest we concentrate the general discussion on Austrians at Wikipedia_talk:WikiProject_Economics#Input_requested_regarding_Austrian_School.--CRETOG8(t/c) 16:57, 9 September 2008 (UTC)

Debasement

The article Inflation says For increases in the money supply or debasement of the currency, see monetary inflation. We have a separate article on debasement but we should perhaps bring these articles together since the concepts are much the same. As a matter of language, inflation refers best to prices (which go up) while debasement better expresses the effect in terms of money - it is worth less. Colonel Warden (talk) 13:06, 9 September 2008 (UTC)

Debasement referred to the physical debasment of gold and silver coins, which were melted down and mixed with lesser metals. Inflation referred to the printing of new paper money, which increased the money supply just as the debasement did. However, as it was not as concrete and action as melting down gold coins, it was given a different term.

Equating inflation with the rise in prices is a modern phenomenon, following the scientification of economics by the mainstream schools. During the first 100 years of its use, the word inflation had nothing to do with rising prices. But that is something you're not supposed to point out here on WP.

Misessus (talk) 22:20, 15 September 2008 (UTC)

Austrian view

Why there is a continuing attempt to remove all mentions of Austrian view on monetary inflation from this article? -- Vision Thing -- 21:37, 19 September 2008 (UTC)

Because people like Gregalton, LK, JQ and others are afraid people will start to question their ideological agenda.

Another question would be what consensus JQ and Gregalton are claiming on this article. Of all the people I've encountered in discussions on economic theory, I don't think I've ever met anyone who could much Greg, LK and JQ. It really makes see how dangerous it is that so many people put so much faith in what they read on WP.

Misessus (talk) 22:08, 19 September 2008 (UTC)

The role of the Central Bank and Fractional Reserve Banking

This section is entirely about the Austrian view rather than, you know, the role of the central bank. I realize that the Austrian minded visitors want to make sure their view is represented and in fact this is a more appropriate place than Inflation. However there is still undue weight here and the article reads like a political pamphlet. A section on the role of Central Bank should talk about how a Central Bank actually affects money supply - say, some discussion of OMO, discount window, monetary base vs. money supply and so on. Some other problems: "Inflation targeting is advised by followers of the monetarist school," - I'm not sure there really is such a thing as a "monetarist school" anymore and in fact Inflation targeting is a, well, "post-Monetarist" idea. The obvious difference is that monetarists wanted to target growth rate of money supply while inflation targeting targets... wait for it... wait for it...Inflation! That'd be price inflation too. I left it in for now but it's inaccurate. "Given that in almost all modern economies the central government "borrows" money from the central bank to fund deficit spending, in reality there are only two ways a modern government can fund its activities" - the sentence is either wrong or gives a misleading impression. While almost all modern economies government might borrow *some* money from the central bank it's by no means the sole means of borrowing money - most of which is obtained from private investors.radek (talk) 02:08, 20 September 2008 (UTC)

Definition comprehension

Someone clean up the definition of inflation please so it can be better comprehended. WinterSpw (talk) 04:33, 22 September 2008 (UTC)

Inflation is a mess

I'm wading through the refuse, trying to pick up some gems and giving them a shine. Not much is left. Obviously, Austrians would argue that the ghetto-ization of their views is disappointing, demeaning, demoralizing...depressing. But even within the ghetto, we should try to get it right. I've given it a crack. It's a very light-on article, and no one should have a problem with these relatively minor edits. —Preceding unsigned comment added by Ron Paul...Ron Paul... (talk • contribs) 08:22, 1 November 2008 (UTC)

Inflation is the increase of the units of a currency, e.g. increase of the amount of dollars.

Misessus (talk) 15:25, 24 November 2008 (UTC)

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