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To: chainik who wrote (50615)	1/21/2006 12:57:51 PM
From: mishedlo	Read Replies (2) \| Respond to of 110194

From the link you provided: en.wikipedia.org In some contexts the word "inflation" is used to mean an increase in the money supply, which is seen as a cause of price increases. Some economists (of the Austrian school) still prefer this meaning of the term, rather than to mean the price increases themselves. Now whether or not one agrees with that usage it should have been clear to everyone that all my discussion has been based on that context. The definition I provided is probably the standard construct even though the cart is before the horse. dictionary.reference.com A persistent increase in the level of consumer prices or a persistent decline in the purchasing power of money, caused by an increase in available currency and credit beyond the proportion of available goods and services. At any rate I hope it is clear that I am not a nutcase as GST implied when he mocked my definition. Furthermore it should have been 100% clear to ANYONE here that the context from which I was speaking was one of these contexts: In some contexts the word "inflation" is used to mean an increase in the money supply, which is seen as a cause of price increases. The reason the Austrian definition is preferable is simply because prices of goods can rise or fall for dozens of reasons but the problem comes about when it is specifically because of loose credit and rampant increases in money supply. It is in fact impossible to target prices as the FED has no control over where the money goes. The FED should have had their foot heavily on the brakes in the late 1990's but failed to do so because prices were not rising that fast. That masked TRUE inflation (money supply). Instead of rapidly rising prices, money went into stocks. Which I repeat is why targeting prices is a fools game. Mish

To: chainik who wrote (50615)	1/21/2006 10:56:45 PM
From: GST	Respond to of 110194

Yes, precisely, and I am quoting your definition of inflation: <In economics, inflation is an increase in the general level of prices of a given kind in a given currency. Inflation is measured by taking a "basket" of goods, and comparing the prices at two intervals, and adjusting for changes in the intrinsic basket. Thus, there are different measurements of inflation, depending on the basket of goods selected. The most common measures are of consumer inflation, producer inflation and GDP deflators, or price indexes. The last measures inflation in the entire economy. General inflation is a fall in the purchasing power of money within an economy, as compared to currency devaluation which is the fall of the market value of a currency between economies. General inflation is referred to as a rise in the general level of prices. The former applies to the value of the currency within the national region of use, whereas the latter applies to the external value on international markets. The extent to which these two phenomena are related is open to economic debate. Some terms related to inflation: deflation is a rise in the purchasing power of money, and a corresponding lowering of prices (the opposite of inflation). Disinflation refers to slowing the rate of inflation, that is, prices are still rising, but at a slower rate than before. Reflation is a term used to denote inflation after a period of deflation, meaning inflation designed to restore prices to a previous level. Hyperinflation is rapid inflation without any tendency towards equilibrium - that is, an inflation that produces even more inflation.>