NetNews Usenet Archive 1993 #3/NN_1993_3.iso/spool/sci/econ/9765

Text File | 1993-01-21 | 2.0 KB | 52 lines

Newsgroups: sci.econ
Path: sparky!uunet!haven.umd.edu!ames!agate!spool.mu.edu!uwm.edu!cs.utexas.edu!oakhill!lexus!dong
From: [e-mail] (Don M. Gibson)
Subject: Re: Inflation
Message-ID: <[e-mail]>
Sender: [e-mail]
Nntp-Posting-Host: lexus
Reply-To: [e-mail]
Organization: Motorola Semiconductor Products Sector
References: <[e-mail]>
Date: Thu, 21 Jan 1993 16:37:07 GMT
Lines: 38

In article [e-mail], [e-mail] (Charles M Kozierok) writes:

>is inflation natural?
>
>i think the answer is: some of it is, but most of it isn't.
>
>the price of something is simply how many dollars someone
>is willing to trade for a product. if inflation means that
>that number of dollars goes up, then inflation is caused by
>the market valuing the product more relative to the dollars
>than it did before.
>
>this can happen because of effects related to the product, or
>related to the currency. i would say that an increase in demand
>for the product would lead to increased prices if supply could
>not expand to meet demand. this might lead to "natural inflation".
>
>but most of inflation occurs due to dollar effects: the government
>prints up more dollars, so the value of a dollar is worth less than
>it was before. as such, inflation is not "natural".
>
>those who know more feel free to correct/expand upon this.
>
>--

It should be stated that the productivity of a country is
never constant.  Thus, to maintain constant/steady prices
for products, the money supply must change with overall
productivity.  Unfortunately, no govt. or mining company
is able to that, so prices will naturally fluctuate.  Now,
one needs to assess human nature.  Prices are sticky, in
that retailers are more inclined to raise prices that to
decrease them (witness auto prices).  Therefore it would
seem that inflation (upward ratcheting) is more "natural"
than deflation or price constancy.
--DonG