Little Joe: Definition of Inflation:
Everybody has a different definition of inflation, applying the term to commodity prices, stocks, and money equally. Strictly speaking, inflation applies to monetary policy only, and in this regard you are correct that the money supply is inflating.
But the more general definition causes confusion in that people see inflation in some sectors (Dow Jones, taxes), while their cost of living is also inflating, leaving them poorer, with less money to spend (deflation). But if the stock market crashes, we will immediately all jump on the deflation wagon, where I am sure the S.E. Asians sit, and they are lurching their way to New York looking for help.
So the argument remains, inflation or deflation, which will reign, which will be "allowed". The fixers are tweeking here and tweeking there, trying to keep the economy from tipping over in one direction or the other, and they are pretty good at tweeking! That's their job! Its fun to watch, and its getting harder and harder for them to constantly balance debt, gold, inflation, deflation, interest rates, and currencies. And this is in a time of "calm" internationally with no major economic, political or military problems anywhere!
Phil |
