Grace,
I have you bookmarked because virtually everything you post is interesting, knowledgeable, logical, and correct.
On this basis, I can't help but believe that you hold a logical mental structure of economics, but your use of economic words doesn't correspond to Austrian, Keynesian, Marxist or Classical economics, or anyone else's that I am aware of. Here I am thinking primarily of 'value', not 'inflation', which is known to have a long history of incompatible definitions.
I can only suspect that you have one or two fundamental premises that are different. Obviously, my assumption would be that they are not only different, but incorrect, but I have no basis for that without even being able to identify them.
Instead, let me refer to one of your assertions that is at least in part correct.
If you really want that expensive item, you will have to stretch the instantaneous value of all units of money, but that doesn't say anything about the static instantaneous fair representation of economic scale in exchange units.
It is entirely correct that the value of money changes, and it WILL stretch if all people together desire to hold more money in total than exists.
However, all economic exchanges are really exchanges of goods and services, with money not being a fundamental factor, but rather serving as a tool or catalyst of exchange, and as a store of future purchasing power, with the future being anything from the next nanosecond to the next century. Money has no fixed value, but has an individual subjective value unique to every individual at every instant. Its value is determined on the margin and relates to how much money you are willing to give up for a given good or service.
If I need to buy something with a $100 bill, I don't need that bill much before I want to spend it. This means that any number of individuals can use this same $100 bill as the holding period before use is decreased from a month to a day to an hour. Of course, money also exists in checking accounts and can be transferred in seconds by electronic means.
Regards, Don |
