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Strategies & Market Trends : Heinz Blasnik- Views You Can Use -- Ignore unavailable to you. Want to Upgrade?

To: zonder who wrote (1559)	5/20/2003 5:58:52 AM
From: gpowell	Read Replies (1) \| Respond to of 4905

How about acknowledging that inflation is indeed "price increases" since that is how it is calculated? Pardon the interruption, but you are being very loose with your terminology. Inflation is defined as a persistent rise in the general level of prices. If the money supply doubled tomorrow and all prices adjusted that would not be defined as inflation. Here's an example for you: Assuming the hypothetical case of general (and high) price increases in every sector DESPITE contracting money supply, would we have inflation or not? Not necessarily. The rise in prices could have been caused by a permanent productivity shock combined with inflexible wages. After equilibrium was reached, prices would stabilize commensurate with the new marginal product of labor. FYI, definition of Price changes: "observed short-run changes in a price index (sometimes called ‘measured inflation’).Price-index changes are caused by many other influences than only ‘true’ inflation. For example, because many indexes are constructed with fixed weights, even relative price movements show up as changes in price indexes. Also, not every change in the price index is permanent, or the result of a change in the underlying trend growth rate of prices."

To: zonder who wrote (1559)	5/20/2003 6:00:12 AM
From: LLCF	Read Replies (1) \| Respond to of 4905

<Is that what you call a response? How about acknowledging that inflation is indeed "price increases" since that is how it is calculated?> Don't shoot the mailman... go to Vienna and tell them: cepa.newschool.edu <I think I was very clear in saying why your quote is wrong, or at least mistranslated. I would like a reply, if you can.> Why would I pretend to argue the ultimate truth about inflation better than all the Austrian Economists and their writtings... as if you or I know some greater truth about the definition of inflation [or "price increase" for that matter... the hedonic pricing has been beaten to death around here] than what has already been said. I simply pointed to one definition. If that's unacceptable to you, it is what it is. DAK