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Displaying (1) Comments | Comment on this piece | Report objectionable art
On inflation.There are vaoirus definitions of inflation. I am going to just take a general approach, and that's inflation is a measure of a currency's value. Inflation means that the currency is losing purchasing power.I've heard claims about how the way out is through inflation, and there have been some people who have suggested high inflation is the way to go, even if that displaces those who rely on a lifetime of savings.There is the whole issue of how much does gold cost, per ounce, relative to the DJIA, relative to this, relative to that. How much is a gallon of gas this week, last week, and on and on it goes. Then there are other things, like electronics, which only seem to go down in value, both new and used.Let's narrow this down to two Keynesian forces of inflation:1. Demand pull (Too many dollars chasing too few goods)2. Cost push (Increasing costs are passed on)1. Are there too many dollars in the economy chasing too few goods right now? Will this change soon?I sure don't see an excess of cash in the economy. Excess of cash owed, maybe, but not cash to spend. Consumers complain too much when a gallon of gas costs an extra few cents.2. Are prices rising to cover rising costs?Well first we have to agree that costs are rising. Once we get over that, let's consider the labor market. What position is any employee in to demand higher wages? There's a line of unemployed workers outside the door, and many of these workers are talented. That certainly doesn't put any employee, or union for that matter, in a good position to request higher wages based on rising costs. Also with the current conditions, many employers are shedding workers, not increasing pay.If anything, people are lowering expectations just to get some business, even if it's selling the future away. I've posted about Arrow Trucking. My guess is that they were moving freight below the actual cost for many months, and it was only a question of when, not if, the failure would take place. Too often people with debt payments seek cash in the short-term, even if it's at a high future cost.In the near future, I don't see any possible Keynesian inflation.I'm open to hearing from the monetarist on their views on the outlook of inflation. We've heard about plenty of dollars being tossed around, millions of dollars in bonuses, yet it seems that there is a lot of hoarding of cash. Using the velocity of money, even if the money supply goes high, if the velocity goes down sufficiently, then inflation is not a threat. The increase in bankruptcy seems to be erasing more and more dollars. Short sales, even without a bankruptcy, isn't helping, as practically speaking, the deficiency isn't collectible.Does anyone have a different view on Keynesian inflation? Who knows, maybe someone sees demand-pull or cost-push? Rate this comment: 0 0
By: | Oct 23, 2015 | Report Comment
heartworm
mzabor
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