Talk:Inflation

Template:Bounty Template:Bounty Note: A bit of older history of this page can be found in the history of Inflation (economics). The page has been on that title for quite some time; this page now has the history of that page, and vice versa. Andre Engels 20:03 27 May 2003 (UTC)

Price Stability redirects here

However I don't think it should. Inflation relates to an increase in prices, whereas price stability covers both sides, whether it inflates or deflates. Confusing for people not familar with economic terms. wholikespotatoes 13:18, 29 April 2007 (UTC)

Make the introduction more clear

I think the introduction should be more clear when it states the two different views of inflation.--ase 20:37, 6 November 2006 (UTC)

"Keynesian nonsense"

Why is this page full of Keynesian nonsense? The version before "172"'s "NPOV" fixup was more accurate. Does "neutral" (in NPOV) mean that objective facts can be ignored in favour of not disagreeing with counterfactual religious beliefs, or does reality actually count for something? 218.101.88.104 05:10, 5 May 2004 (UTC)

I am trying to take your allegation seriously, but it is too general to take action on. I looked at the contribution made by "172" last summer and find most of it positive. He gave the article an introductory definition when previously it had just been a cause of inflation masquerading as a definition. Yes, some of his contributions show a Keynsian perspective, one or two points may even be contraversial, but I see nothing that is nonsense. mydogategodshat 16:22, 7 May 2004 (UTC)

what is vss capital gains?

This paragraph is under the Misery index title: "In opposition to the deadweight loss argument against the redistributive nature of inflation it has been argued that, in economies where the rate of vss capital gains tax is low or nil, inflation acts as an important “wealth tax”, and that low inflation societies will tend to see wealth condensation."

If you google "vss capital gains", the only page you'll find is Wikipedia's inflation article. I'm thinking there should either be an explanation for what that is, or the higly controversial allegation that inflation will act as a wealth tax should be removed. Furthermore, what has that got to do with misery index?--Ezadarque 02:13, 19 April 2006 (UTC)

I added the quantity theory of money

I put in the Quantity Theory of Money. Hopefully this would counterbalance some of the Keynesian stuff.

Mydog: I find these statements rather highly controversial: " However, this cost may be "worth it" if it avoids a serious recession, which can have even greater costs.

In fact, controls may complement a recession as a way to fight inflation: the controls make the recession more efficient as a way to fight inflation (reducing the need to increase unemployment), while the recession prevents the kinds of distortions that controls cause when demand is high."

The author of these statements admits that most economists denounce price controls and then goes on to say that they could be "worth it"?? This is non-neutral speculation. Furthermore, I believe his statement that price controls help fight inflation is highly speculative as well. --Dissipate 07:59, 22 Jun 2004 (UTC)

I agree that that statement smells fishy. Recessions are a natural part of the business cycle and perform the needed function of culling the weak enterprises from an economy. Inflation may be able to delay or postpone a recession but if you go to long, you end up needing an outright depression to clear out the cruft and that is most certianly "not worth it". Carbonate 00:44, 27 May 2006 (UTC)

Shouldn't the Quantity theory of money be PT = MV, where P is the price level, T is the transactions, M is the amount of money in the economy and V is the velocity (or how many times the total amount of money has been spent)? 89.241.175.68 20:57, 18 June 2007 (UTC)

Controlling Prices

In dealing with inflation there is only one price that should be regulated. And that is the price of money (not the price of credit).

Interest rates are the price of credit. If you want credit then interest is the cost you must bear. The price of money is the amount of stuff you must exchange for a given quantity of money. If you want money then stuff is the cost you must bear.

The price of money is determined by both the supply of money and the demand for money. Hence their was significant inflation during the black death of the middle ages in Europe even though the stock of money (gold coin) was basically fixed. During this period the demand for money dropped significantly as the population and the economy contracted. Moneys value plummeted briefly.

Regulating the price of credit through interest rate policy is just good old fashion centralised command economy thinking. Instead the price of money should be benchmarked against gold or a commodity index and regulated using [open market operations] or better still self-regulated in a system of free banking.

There mistake of the 1980s was thinking that the size of the money supply should be regulated. Its the value of money thats most important not the quantity.

The current mistake is in thinking that a government appointed guru should be given god like market power in order to control the price of credit.

TERJE 22-JUNE-2004

11:07, 22 Jun 2004 (UTC)11:07, 22 Jun 2004 (UTC)

Short for

Should the article be called "Price inflation"? My understanding is that this is what the common use of the term is short for. The current title could then go to the existing disambiguation page.

As it is now, the intro paragraph begins "In economics, inflation is a fall..." which seems counterintuitive and does nothing to explain the reason why the term is used. I will insert the word "price", which seems to clarify as well as provide a more useful contrast with the alternate usage and the 1920s US example in the second paragraph.

toh 23:39, 2004 Oct 17 (UTC)

I would also go for that ae» inflation page, i.e. monetary expansion.

--The HellCat 23:16, 28 October 2005 (UTC)

Inflation Poetry

Just had a poetry attack while reading this article -- it's extremely lame and I'm very ashamed of myself, but couldn't help it:

"Why is there ever inflation?"
Is always the common man's question,
When we all know that the nation
Builds goods in excess of consumption!

--Gutza 23:53, 5 Nov 2004 (UTC)

Gutza, wouldn't "goods in excess of consumption" lead to declining prices? Peter Johnson [17:02, 21 November 2005 (UTC)]

Of course -- and they do decline. Take a look at all technology-related products: apart from the obvious case of the IT industry, there's cars, watches, air conditioners, cameras, sound systems, and so on. If you were thinking about base products (food industry for instance), at some point they're destined to reach a point where it simply doesn't make sense to increase their crops/herds/etc, because there wouldn't be a market for all the stuff, and it would be wasted -- therefore they don't increase production any more, therefore the prices don't drop any more. But overall, the production exceeds consumption, and the overall wealth of all people increases, and as a result new money are needed to cover for all the positive wealth delta.

For completeness, here's a quotation from the current version of the article: "because the general amount of wealth gradually increases in an economy (as long-lasting things are created, new technologies invented, et cetera), a small amount of currency inflation is actually necessary to keep prices stable, and need not cause price inflation." --Gutza ^{T T+} 12:41, 8 May 2006 (UTC)

POV

Inflation - the mechanics of inflation: the great government swindle and how it works A detailed analysis of the mechanics of the great modern government swindle known as inflation.

Yes we know it's stupid and a "joke". But I think it should be there.--Jerryseinfeld 12:08, 30 Dec 2004 (UTC)

We are under an obligation to provide credible sources first. This one isn't credible. Stirling Newberry 19:24, 30 Dec 2004 (UTC)

Well I looked at the page, and I don't see the joke. It looks a lot like a "colorful" version of "What Has Government Done to Our Money?"---an Austrian classic. 131.215.242.164 20:14, 27 December 2006 (UTC)

money supply inflation and price increases

if the article isn't going to adequately recognize inflation as inflation of the money supply (adequately, as in part of the primary definition in the opening paragraph), it should be renamed "price inflation". the opening should at least be changed to "In popular terminology, inflation is an increase in the general level of prices of a given kind." "economics"? c'mon. the implication that only austrian economists hold the money supply definition is almost creepy. remember, popular opinion is not necessarily NPOV. SaltyPig 00:53, 27 August 2005 (UTC)

Reasoning behind core inflation

Economists usually factor out food and energy prices because they jump around so much; doing that showed zero inflation.

But factoring out food--and especially energy--may not be the best way to look at the inflation numbers at this time. Energy costs, many economists fear, will play the leading role in the economy in the next few month.

I found these sentence very informative since I have always wondered why they never include energy. The question is, what is the best way of handling this dynamic cost? Pulling them out is damn, especially form the bulk of inflation.

The core rate is nonsense. If you belive (incorrectly) that prices are inflation, how can you then justify leaving the most responsive products out of the calculation? Inflation is an increase in the supply of money and prices only reflect the reletive scarcity of that money. This is the difference between _cause_ and _effect_. Carbonate 13:42, 25 April 2006 (UTC)

The Mega Revert

This article has been larded up with POV garbage, outright violations of citability, and carving by POV warriors. Assertions like "the mistaken use of" and so on are simply against the rules. I've rolled the article way back before these edit ars, and will take a more interventionist stance from here on in to protect the article form anonymous vandalizing.

Once again, the rules are that we are producing an encyclopedia reprsenting citable sources in an NPOV manner without original research. These addtions were such a mess that keeping them was simply impossible. Vague circular loops aboutglobalization, gold bug sermonizing and the rest are not acceptable.

Stirling Newberry 14:07, 12 November 2005 (UTC)

Striling Newberry - Your mega revert is a sign of laziness

Reversed all of Stirling Newberry's changes as he has reverted to a much earlier version than justified, wiping out the work of many good editors. True, some improvement is needed. But rather than improving the layout of removing irrelevencies and tidying up, he just puts it back to some vague date in the past. Please have another go, Stirling, but do it properly. You are not a Cyber God. Deception 16:29, 12 November 2005 (UTC)

Real Meaning of Inflation

I sincerely doubt that Austrian economists are the only ones that hold inflation is an increase in the supply of money. Look at webster.com - "an increase in the volume of money and credit relative to available goods and services resulting in a continuing rise in the general price level" -That's the exact definition Milton Friedman (who is neoclassical, not Austrian, or so I've heard), that inflation is an increase in the supply of money that outpaces the increase in output.

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• My understanding is that Prof. Friedman is the founder of the Monetarist school. Peter Johnson [10:42, 29 November 2005 (UTC)]

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On the front page: "General inflation is a fall in the purchasing power of money within an economy". Isn't inflation is a general rise in price (which includes wage because wage is determined by productivity and price) and NOT purchasing power? __earth ^(Talk) 07:47, 27 January 2006 (UTC)

er, my mistake. I was refering to consumer purchasing power, not inflation. The point I wanted to bring earlier was that since inflation in not real (ie nominal) it shouldnt affect consumer purchasing power. I somehow mistook purchasing power of money as purchasing power of consumer. __earth ^(Talk) 04:42, 15 May 2006 (UTC)

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There are three meanings of inflation and all of them are valid and correct. The three meanings of infaltion are:

• a fall in the purchasing power of money
• a general rise in price
• an increase in the supply of money (inflation of the money supply), (the symptom of which is both of the above).

Watercolour 15:37, 28 January 2006 (UTC)

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If as you say, the first two are the effect and the third is the cause, are they really the "meaning"? If that is true than the meaning of disease would be that you cough...

Every government in the whole history of mankind has inflated and allowing the use of price increases as equivolent to inflation as the media constantly does makes it easier for the very organisation who are responsable for increasing the money supply to justify it. The article on inflation should be very clear about what is REALLY inflation and what are just the effects of it. If the effects must be mentioned, they should be properly labled as effects and not portraid as the cause or "meaning" even if that is what is commonly used in the media.

Carbonate 00:55, 23 May 2006 (UTC)

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Inflation is, in fact, just the increase in the general price level ONLY. The way the money supply moves is irrelevant. Friedman's definition - "an increase in the volume of money and credit relative to available goods and services resulting in a continuing rise in the general price level" is not totally correct. It is possible to get inflation with no change in the money supply (eg higher oil prices) and vice versa. Friedman actually recanted his earlier belief that watching the MS is the best way to target inflation (central banks now use the MS to target cash rates).

--ravage 06:37, 6 June 2006 (UTC)

The problem with your statement "Inflation is, in fact, just the increase in the general price level ONLY" is that it discounts things like economies of scale as deflation and scarcity of goods (eg. oil) as inflation. Yes prices can change without a change in the money supply but those changes are not inflationary. Inflation is an increase in the money supply and the resulting changes in prices are the effects of inflation and not inflation in and of themselves.

Consider your sentence "It is possible to get inflation with no change in the money supply (eg higher oil prices) and vice versa." with the slight change "It is possible to get price changes with no change in the money supply (eg higher oil prices) and vice versa.".

Carbonate 04:28, 18 June 2006 (UTC)

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Carbonate: Price changes may not be inflationary. An general increase in the price level is. May I direct you to the Economist - 'Rising PRICES, across the board',

Econlib - 'Inflation is the loss in purchasing power of a currency unit such as the dollar, usually expressed as a general rise in the prices of goods and services', and Mankiw's Macro text - 'Inflation: An increase in the overall level of prices'.

The last few years has seen historically low interst rates (ie CBs have been increasing the MS) and yet inflation has been contained. How? Central banks have been able to do this partly because of the deflationary impact of China's industrialisation- a real, not monetary phenomenon.

Increases in the money supply are inflationary to the extent that they increase the price level. Pg 94 of Mankiw's 5 ed. - 'Money supply and money demand determine the price level. Changes in the price level determine the inflation rate.' The quantity theory of money in a nutshell. --ravage 13:34, 20 June 2006 (UTC)

Inflation bounty - inflation in action

First the inflation bounty is $1, now it's $5. Forgive me if my maths is wrong, but that's 400%! What greater testiment to inflation could there be? Gwaka Lumpa 15:51, 18 December 2005 (UTC)

Question

I was wondering, if you buy a gold ring, will that increase inflation? Only the young 01:22, 4 March 2006 (UTC)

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No, inflation is a function of size and 'nothing' else. By purchasing a ring you have not increased the amount of money in circulation (unless the money you used was home made ;) ) and the loss of gold in the production of a ring is kept amazing low by gold smiths who recycle even the gold contained in the fabric of the buffing wheels used to polish the ring. Any loss of gold that does occur is actually deflationary.

Carbonate 00:31, 23 May 2006 (UTC)

Consequences of Inflation?

What are the consequences of inflation have not been discuessed yet in this article, such as "shoe leather cost", "menu cost" etc. egc

The most important consequence of inflation is that those who save are made poorer. Everyone who owns there house, everyone with a stock portfolio, everyone with money in the bank. This makes society poorer because it is the savers that invest in new businesses, new captial good and create new jobs. These should be the headline consequence with "shoe leather cost" an mere foot note, otherwise you risk marginalising the real problems.

Carbonate 00:37, 23 May 2006 (UTC)

Opening para + NPOV

The current opening paragraph is:

In economics, inflation is simply an increase in the money supply. One common fallacy is that inflation is an increase in prices, when this is actually a consequence of an increase in the money supply.

As far as I know, there is little consensus about the varying definitions of inflation -- according to economic theory, they should all coincide, but according to actual measurements, they don't. When something like consumer price inflation is talked about, even by economists, they certainly do not mean an increase in the money supply.

And it's certainly not a fallacy! It's a mistake, maybe, or a usage that isn't discussed in the article (except it is, because the inflation-rate-by-country graphic is most certainly not based on money supply measurements), but a fallacy is something quite different.

In short, this needs a lot of work.

RandomP 09:09, 12 May 2006 (UTC)

It still needs a lot of work, please help! Some NPOV issues:

• it's not "the government" that issues money. If you have to say, say it's the government or central bank, but even that's inaccurate in some economies.
• the scope of a currency doesn't always coincide with a country. The PRC has several currencies, and there are many currency unions.
• inflation is not bad. The neutral point of view is that inflation needs to be described with all its notable effects, and no judgment be made which of those are bad and which aren't.
• Gold is no longer money. It was money, or related to money, until the 1970s, but nowadays its use is limited to a couple of gold bugs.
• GDP growth is not good, and sustained economic growth is not a fact. There are many people out there who would like to see GDP per capita fall, for any number of reasons. There are also those who would like to see the population fall faster than GDP per capita rises.

RandomP 11:47, 14 May 2006 (UTC)

If gold isn't money, why does the U.S. Air Force pack ejection seat kits with gold sovereigns? LMAO, not even gold eagles but sovereigns!!! Gold is and always will be money because it is rare and hard to get (you try going in to a South African mine 2 miles deep without dieing from the heat). USD are common and getting more so by the minute. Many governments have tried to obsolete gold and all have failed because they can't resist debasement. I recognise what you are saying about the bretton woods agreement but what is 30 years compared to 3000? As for the "few gold bugs" many many asians and indians (ie 1/2 of the people on the planet) use gold to save and not the USD. The world does not revolve around the U.S.. Carbonate 00:57, 27 May 2006 (UTC)

I don't know about the sovereigns story. I very much doubt it's true (it sounds like an urban legend).

Something being "rare and hard to get to" certainly doesn't suffice to make it money. At best, it gives it some rarity value.

I don't remember comparing the US dollar specifically to gold. If I were to do so, the main point I would make is that while US cash is obviously not something you want to hold for any length of time, there are better investments to make with US dollars than with gold. Frankly, though, I'd recommend you go with the British pound, Japanese Yen, or Euro, all of which have clear inflation targets ...

If gold is working as money, please tell me where I can get a credit denominated in gold? As far as I know, such a thing is totally nonexistent ...

So if the past 35 years can be ignored in favour of the previous 3,000, can we just go ahead and change the Internet article to say that, historically, the Internet doesn't exist, even though some people think that might have changed when it was switched on? Sorry for the analogy, but I see about as much merit in that argument as in yours.

35 years ago, it became, overnight, virtually impossible to take out a loan in (what translated to) gold. That's certainly something you'd expect to be able to do with money ....

RandomP 13:34, 27 May 2006 (UTC)

It may have been the marines but as a factual matter that is trivial for you to verify yourself. All the currencys you list are fiat currencies and according to the tables (world money supply) in the back of The Economist all are being inflated at 10% a year give or take. Gold can be leased from www.kitco.com and a purchasing system similar to Paypal is available through www.goldmoney.com. Do you really belive that something ingrained in all of mankind can be changed in three decades? I resepect your opinion and as someone who knows some of the details involved in fire assaying I agree that it is hard to determine if a chunck of metal is really gold. But I am also sure that I have been passed foriegn coins as if they were local (Canadian quarters look like US ones, Australian dollars look like French Francs, the 5 pence is similar to the 10 peseta), do you claim this has never happened to you?

Again, I respect your opinion on gold, but as someone who belives gold to be "just a commodity" I don't think you should be altering the section of gold as an indicator of inflation. Especially when statements like "you can't really measure inflation over time" are put in; that is exactly what gold has done, measure inflation over the millenia (I repeat Millenia). I think I should also make it clear that I am not a gold bug as much as I am a fiat currency bear. As someone who has an amount of savings, I am very concerned about governments (or as you insist: central banks) inflating away my savings.

If there are any other points that I have not addressed, please ask and I will try to do my best to answer them.

Carbonate 19:58, 27 May 2006 (UTC)

For the record RandomP, saying that governments issue money as opposed to central banks is not a point of view issue. At most it is a poor choice of terms. Stop trying to force every comment into a, "it doesnt agree with me, therefore it isnt neutral" hole. Not productive, not appreciated. Oh and yes, gold IS money and for that matter so is silver, and it shall remain so for so long as man inhabitith (sic) this earth. That was an allusion to the lifespan of gold and silver's status as money.--Morgan 07:09, 21 June 2006 (UTC)

Thanks! You're absolutely correct, of course, in that "governments issue money" isn't just a non-NPOV statement, it's flat out correct (in its generality). Statements like "governments are driven to print fiat money because they can make unlimited quantities of it" (not a quote), however, do violate the NPOV, because they implicitly assume that governments want to spend money rather than, say, care about the overall health of the economy and thus limit their role accordingly. That statement just doesn't make any sense if "central bank" is substituted for governments ...

As for why I think of that as a POV issue, it's that it's true from the American POV. The US government is involved very directly with the issuing of money, as the Federal Reserve isn't precisely as independent as it could be.

As for the "please stop" (well, without the please, but anyway) comment, I'm just trying to improve Wikipedia here. I assume that's what you're here for, too, and advice on how to go about it better is always appreciated. I'll try to mark USPOV explicitly, so people who think USPOV isn't a NPOV problem don't have to deal with whatever terrible pain it causes them to see it regarded as such ...

RandomP 09:57, 21 June 2006 (UTC)

What is inflation all about?

I've removed that section. It's too long (with not a single wikilink -- in fact, it's so long that I didn't really bother reading it at all until today), unencyclopedic, and makes wrong assertions.

If there's anyone who actually wants this in, please take the time to fix it, and add it back in piece by piece, with discussion. I see nothing of value in it.

RandomP 10:57, 14 May 2006 (UTC)

I've removed the above section again. Please do not readd without discussion. RandomP 16:43, 19 May 2006 (UTC)

And I've taken it out again. When it gets re-added, as begins to seem inevitable, please note that it is a copyvio from [1]. -- Mwanner | Talk 21:27, 20 May 2006 (UTC)

Gold

Gold has held its value and spaned many a fiat currencies. Anyone who belives that the Bretton Woods agreement changes the status of gold to anything less than money is foolish. Also, the current heading of gold in the inflation article states that some people regard it mearly as a metal which is false; no one would refuse an ounce of gold in exchange for a meal or pair of shoes. It is important to convey this 'forever' value that gold has over the 'for now' value of even the U.S. dollar (which is its self being inflated away at an incredible price since Nixon halted the exchange of dollars for gold).

Carbonate 00:26, 23 May 2006 (UTC)

Respectfully, I disagree. Yes, gold is valuable, and has been so in most situations for a significant period of time. However, what is considered "valuable" is subject to change - while I have no detailed statistics, it seems fairly clear that spices, aluminium, salt, steel, and small diamonds were once considered much more valuable than now, and crude oil, much less.

I certainly don't think you could use (physical) gold to buy a meal or a pair of shoes today - I would be very suspicious if you tried, at least, and wouldn't know how to verify what you offered was indeed real gold. However, if the proper verification were offered, I'd accept sufficient amounts of quite a few metals - 10 kg of copper would do just fine for the shoes I'm wearing!

There are many gold coin being minted which identify the quantity and quality of gold. Carbonate 00:40, 27 May 2006 (UTC)

And I wouldn't trust any of them, thank you very much. Maybe you know how to verify easily whether a coin that looks like gold is real or not, but I don't. I believe it's actually impossible to do that without destroying the coin ... RandomP 13:17, 27 May 2006 (UTC)

I personally don't think gold has any 'forever' value, really. Ultimately, there is a lot of gold on earth, more than anyone would ever know what to do with. While I have no idea how many years precisely it will be before someone comes up with an easy way of extracting all that gold, I'm convinced it'll happen. But, hey, if your personal opinion differs, that's a good thing: that way, we can make sure that wikipedia doesn't take either of our personal points of view, and gets closer to the neutral point of view.

RandomP 18:15, 25 May 2006 (UTC)

The crust of the earth is 10% iron, but that does not mean iron is of no value. Gold must be mined and that requires labour at the very least (see the section on Labour as a measure of inflation) as well as discovery of feasably minable resources (see Hubbert peak theory. If one considers forever to be all that has been, then gold has already been a forever store of wealth as it has outlived every other form of money. You are correct in questioning the future, but I can assure you that the USD will not be a forever measure so what is left other than gold (and labour)? As for the absolute quantity, consider that the entire market capitalization of the entire gold sector is less than many large companies.

Carbonate 00:40, 27 May 2006 (UTC)

I believe in the existence of something called the future. So, no, forever isn't just "all that has been". As for labour required to mine gold, sorry if I wasn't clear that I believe it's entirely possible new technologies will drastically reduce the labour and energy requirements of mining gold. As I said above, personal opinion. RandomP 13:17, 27 May 2006 (UTC)

I'm glad to hear you reiterate that this is your opinion. As such, it is not appropriate to express it in the article under the gold section. The gold as a measure of inflation is for that purpose and I would appreciate it if you would refrain from diluting the content of gold as a measure of inflation to "gold is just a worthless metal and inflation can't really be measured anyway so there". Carbonate 19:32, 27 May 2006 (UTC)

Please do not misquote me. Whether or not future technology will make gold available more widely is open to debate; that a section of text beginning by quoting that saying and adding "and for very good reason" violates NPOV is perfectly clear. If you think other bits of the removed section should be reincluded, feel free to do so.

RandomP 19:55, 27 May 2006 (UTC)

I will remove that statement then when I revert you reversion. Carbonate 20:01, 27 May 2006 (UTC)

The next NPOV problem is a mere sentence on, nevermind that starting with the saying is still a clear violation of the NPOV. "[Gold and silver] are the true benchmark of inflation". "this immutable rate" (at which gold is mined). "The discussion of inflation would be moot if not for fiat currency" (flatly contradicting that the concept had been discussed before fiat currency was widely used). Fiat currency is referred to as a "money substitute".

Clearly, none of those statements comply with the NPOV. Together, they make up virtually all the content of the section you continually restore. Might be best to ignore the three-revert-rule and remove that section ...

RandomP 20:12, 27 May 2006 (UTC)

Well that would certianly suppress the idea that gold is the only long term form of viable money which is what you contend in the first place. One question to consider is cost of POV compared to you false facts that gold ceased to be money with the signing of bretton woods and the weasle word "some" in refering to the people who view it as just a commodity. I have no problem making the article nutral, but that is not what you are doing by adding statements that contradict the very premise of the section.

Carbonate 20:25, 27 May 2006 (UTC)

I am requesting mediation on this issue Carbonate 20:50, 27 May 2006 (UTC)

I'd just decided to stay away from the article for a while. Will be back after the weekend. Cheers

RandomP 23:51, 27 May 2006 (UTC)

First of all, thanks for improving the article since then! Some parts are certainly getting better, but I do hope you're still requesting mediation. The current section is still worse than the one I replaced it with. List of issues that I believe could be mediated:

• Starting with the saying is inappropriate and violates the NPOV by hiding behind a quote.
• Gold and silver are no longer used as money, and we just do not know whether they have been "since the invention of money", nor will we ever have a way of knowing for sure.
• "have held their value for millennia .. metal": I'm unhappy with this. Millennia are very long, and it's very hard to compare values before and after (to the extent that that's possible) the industrial revolution .. I'm also not sure whether silver has held more than its industrial value at times.
• "this immutable rate": it's definitely not immutable. Mining can be influenced, or, at least, gold can be effectively destroyed by dissolving it in the ocean. This also suggests that it'll always be 2% p.a., and that's an outright prediction.

RandomP 03:41, 31 May 2006 (UTC)

The Truth about the Goldbugs

Those who argue that gold some has special status as money are not merely out of the mainstream, they are confined to a small contingent of right-wing/libertarian cranks, none of whom hold any significant academic appointment, and many of whom are affiliated with those who market and sell gold coins and other gold investments. The fact is, the value of gold is not a measure of inflation any more than any other commodity metal. It does serve for many as a hedge against inflation, but again, so do many other commodities, investments, and financial instruments, such as silver, copper, real estate, inflation-indexed bonds, and commodity futures.

No difficult or complex argument is even needed to understand this. The dollar/gold ratio changed from $35/ounce as the official ratio pre-Nixon to $800 in 1980 to well under $400 in the late 1990's. Did the cost of living rise 20-fold from the 1960's to 1980, and then decline by more than half from 1980 to 1995? Anyone with a rudimentury knowledge of history, or who lived through these periods, of course knows this was not the case.

Inflation a measure of the price of money, while the price of gold is a measure of the supply and demand of a certain commodity that once was used as money.

This article ought to discuss significant minority viewpoints, but the goldbugs are not a significant minority. They are more akin to the creationist view of the origin of man. That is, a small minority of right-wing cranks. That they may be a very vocal minority here does not change the fact that their views should not be respectfully discussed in an encyclopedia.Kitteneatkitten 20:24, 1 July 2006 (UTC)

I doubt your prejudiced views are even true in the U.S. as I know many grandparent give there grandchildren gold and silver coins on special occasions. Outside of the U.S. gold is widely viewed as a primary store of wealth because peoples in the old world have had long experince with government issued currency. I would suggest you try looking at your own views through the coloured lens you apply to so called "gold bugs". I think you will see a very ugly green tainting the paper you call money which is currently increasing in supply by 10% year over year in the U.S. Carbonate 07:43, 17 July 2006 (UTC)

Read about the Asian currency crisis.

Labour

I'm sure this will be heavily contested so before you start, please read at least the first part of Adam Smith's book "The Wealth of Nations". Is is free (published in 1700s) from the Guitenburg Project and made enough sense for someone to name a beer after the guy ;)

Carbonate 01:00, 27 May 2006 (UTC)

How much inflation in the U.S.?

It would be nice to have a table showing what a U.S. dollar in 1900, 1905, 1910, ..., 2000, 2005 would actually be worth in each subsequent labeled year. To make it clear, I'd like to know for example how many 2005-year dollars would be equal to one 1970-year dollar, and so on for each pair of years. I realize these numbers would be averaged best-guesses, but seeing the real impact of inflation in a country that has at least made some attempt to control it would increase the impact of this Wikipedia article. -Wfaxon 06:48, 8 June 2006 (UTC)

You can find such tables in many places, and there should be a link to one of the more reliable sources in the article; however, the information is hardly encyclopedic, nevermind the difficulty of copyright. The only caveat is that they will usually only list the values for one of the years fixed: they'll tell you how much one 1900 dollar is in 2000 dollars, for example (quite a bit), but they won't tell you how much a 1935 dollar is in 1900 dollars. You can get an approximation by dividing the two values - if a 1900 dollar is $200 in 2000 dollars, and the 1935 dollar is $100, then a 1900 dollar is roughly $2 in 1935 dollars. This is going to be quite exact in the rarest of cases, but surprisingly close in the real world.

RandomP 11:07, 8 June 2006 (UTC)

The figure quoted widely is that the dollar has lost 95% of its value since the creation of the Federal Reserve. Carbonate 04:43, 18 June 2006 (UTC) good

RFC: Measuring Inflation/Gold section

User:Carbonate and I had a very long discussion, both here and in a mediation case, about the subsection "Gold" in the section "Measuring Inflation", which currently reads:

There is a saying "Gold is money, period." Gold and silver have been used as money since the invention of money. These two precious metals are a benchmark of inflation and have held their value for millennia compared to the centuries, at most, of the Denarius and Pound sterling both of which started out based on precious metal. Gold has experienced an historical inflation rate of about 2% (subject to short term swings many times larger than this) as new supplies are mined and refined and it is this immutable rate which has prompted governments throughout history to turn to the creation of fiat currency. While the rate of inflation of the gold supply is limited by the effort required to find feasible deposits, the labour required to mine the deposites that are found and the energy required to refine the mined ore in to gold, nothing effectively stops governments from printing fiat currency. Gold and silver, in one form or another, were used as money from at least 600 BC and are currently minted in to gold coin and silver coin all over the world.

At the Bretton Woods Conference, the Bretton Woods system solidified the gold standard by requiring the signatories to adopt an exchange rate for their currency. This system remained in place until Richard Nixon "closed the gold window" after France began to demand the gold represented by the U.S. dollars held by the central bank of France. This run on the U.S. gold deposits happened because there were more dollars in circulation than was backed by gold. Today, the U.S. Treasury values its gold at $42.2222 per troy ounce as stipulated by the Bretton Woods agreement.

My suggestion for this section, if it is to stay, is

Gold and silver, in one form or another, were used as money from at least 600 BC to at least the end of the Bretton Woods system in 1971. After 1971 transactions even between countries became independent of gold; nonetheless, gold and silver coins are still minted all over the world, and some websites allow users to use gold to pay for goods and services.

If gold is considered a form of currency, its money supply has risen by about 2% a year since 1850, as new supplies are mined and refined. Unlike with fiat currency, there is no way, even in theory, to introduce unlimited gold into the economy.

This is drastically shorter, but is, I believe, an accurate description of the history of gold as money, and what little can be said about it as a measure of inflation.

RandomP 19:21, 17 June 2006 (UTC)

I proposed the section say:

--

In 1913, J. P. Morgan said before the House of Representatives "Gold is money, and nothing else." in opposition to the creation of the Federal Reserve. The precious metal gold has been a benchmark of inflation and have held their value for millennia compared to the centuries, at most, of the Denarius and Pound sterling both of which started out based on precious metal. Gold has experienced an historical inflation rate of about 1% per annum and it is this restrictive rate which has prompted governments throughout history to turn to debasement and the creation of fiat currency. While the rate of inflation of the gold supply is limited by the effort required to find feasable deposits, the labour required to mine the deposites that are found and the energy required to refine the mined ore in to gold, nothing effectively stops governments from printing currency. Gold and silver, in one form or another, were used as money from at least 600 BC and are currently minted in to gold coin and silver coin all over the world.

At the Bretton Woods Conference, the Bretton Woods system reinstated the gold standard by requiring the signatories to adopt an exchange rate for their currency. This system remained in place until 1971 when Richard Nixon announced "The gold window is closed." after France began to demand gold for the U.S. dollars held by the central bank of France. This run on the U.S. gold deposits happened because there were more dollars in circulation than was backed by gold. Today, the U.S. Treasury values its gold at $42.2222 per troy ounce as stipulated by the Bretton Woods agreement.

--

I belive we should check the accuracy of the Nixon quote. This may be a similar situation as the JP Morgan quote where the meaning has been diluted over time. I have removed the 2nd sentence compleatly and changed immutable to restrictive while eliminating the "mined and refined" part which is better said shortly after.

I belive that starting with the federal reserve quote makes a nice transition from the money supply measure which proceds it. I belive that having the historical use of gold as money at the end of the last paragraph and the discussion of the bretton woods agreement provides a clear seperation of the two ideas and allows for good flow and tie in between the paragraphs. I belive RandomP wanted the word solidified changed to reinstated or something to that effect so I have done so. The year that the bretton woods ended has been included as well as the removal of "represented by" language.

I also trimmed a duplicate link to fiat currency and shortend the 2nd instance to just currency.

Carbonate 04:40, 18 June 2006 (UTC)

Hm, both seem reasonable. One is more succinct and easy to read, but other includes more info. Hard call. What about mentioning that people thought gold would collapse in value once governments stop using it, but then it went on to skyrocket in value? Or would that be POV?MrVoluntarist 16:54, 19 June 2006 (UTC)

Anonymous comments

An anonymous user added some comments to the article; I think they should be addressed, but I don't think they belong in the article proper. I've thus moved them here. Note that the comments are not mine, I'm just copying them over.

RandomP 18:07, 30 June 2006 (UTC)

International trade

If the rate of inflation is higher than that abroad, a fixed exchange rate will be undermined through a weakening balance of trade.

needs clarification

Non-Keynesian theories

Most non-Keynesian theories of inflation can be understood within the neo-Keynesian perspective as assuming that the NAIRU and potential output are both unique and are attained relatively quickly. With the "supply side" at a fixed level, the amount of inflation is then determined by aggregate demand. The fixed supply side also implies that government and private-sector spending are always in conflict, so that government deficit spending leads to crowding out of the private sector and has no effect on the level of employment. Thus, it is only the money supply and monetary policy that determine the inflation rate.

does not follow, needs clarification. Complete crowding-out only occures when money supply is fixed (LM curve is vertical), as the economy it is pegged to the gold standard

Supply-side economics

Supply-side economics asserts that inflation is always caused by either an increase in the supply of base money or a decrease in the demand for base money (or both). The value of money is seen as being purely subject to these two factors.

why?

This article is truly awful and needs a ground-up revision

As I commented above about the section on gold, which I have now repaired, this article is far below wikipedia standards because large portions of it are written by far-right-wingers whose eccentric views of money and inflation are far outside of the economic mainstream (and let me add the economic mainstream is fairly well dominated by political conservatives, for instance Martin Feldstein (Harvard), Greg Mankiw (Harvard), and Milton Friedman (Chicago), so it is fair to characterize the viewpoints advanced buy this article as far-right).

It is simply amazing that an article on inflation contains almost no mention of the velocity of money, a concept central to the understanding of inflation. My suggestion is that a ground-up revision of this article closely match the form and content of the discussion of inflation in introductory macroeconomic textbooks. Personally, I have seen versions of the intro to macroeconomics textbooks authored by Mankiw, Krugman, and Hyman, and they are very good and very clear and any of them would be an excellent start to a revision of this article.

There is indeed real controversy among economists on how to define and measure inflation, but it is not between the far-right goldbugs and the rest. Kitteneatkitten 21:26, 1 July 2006 (UTC)

---

My suggestion would be you reread those intros and give it a shot! Even if a total rewrite might not be acceptable to some contributors, it would be a great thing to have in the Wikipedia database, and this article does need work.

You might also find it helpful to review other WP articles, particularly money supply, which at least mentions the monetary exchange equation.

Good luck!

RandomP 21:49, 1 July 2006 (UTC)

I would if I have the time. As I said, it would probably be best to start with a completely new article based on a college textbook. Maybe there already is such an article on some economics course webpage. I agree with the poster who called the article as it stands now a disgrace. It is the worst major article I have seen on Wikipedia. For now I only have the time to correct the worst of the gold bug weirdness.

Kitteneatkitten 18:59, 10 July 2006 (UTC)

The aweful part of this article is the Keynsian nonsense. Even tho he was correct in his assertions that speding influnces the economy, it is the "weak economic force" compared to the money supply which is the "strong economic force" (analogy to nuclear forces intended). When Keynesian theories agree with monetary theories then the economy tends to move as they both indicate. But when keynesan theories oppose monetary ones, the economy tends to move with the monetary ones.

You can not spend your way to prosperity. You can not print your way to riches.

Carbonate 07:52, 2 July 2006 (UTC)

Explanation/Justification for changes made to section on Gold

Among the problems I corrected and improvements I made in the gold section:

1. There is a saying "Gold is money, period."

An unattributed and ideological quotation is not an appropriate way to begin a sub-article. Removed.

If you had read the extensive discussion as well as the proposed revisions to the subsection, you would have seen that it has been attributed, forms a fundamental argument by a well respected banker and is directly relevant to the issue of inflation. Added to the end of the article.

2. Gold has experienced an historical inflation rate of about 2% (subject to short term swings many times larger than this) as new supplies are mined and refined and it is this immutable rate which has prompted governments throughout history to turn to the creation of fiat currency.

Unsourced, vague (no time period specified), not NPOV. Replaced by a discussion of debasement, inflation, and hyperinflation under gold and under fiat money.

The subsection is about gold as a measure of inflation. The rate of inflation of the gold supply is required for this. As per extensive discussions, the figure was sourced (with a URL that I can't remember at the moment). As for the time period, it is divided in to 2 parts. Pre 20th century is very low, less than 1% p.a. and more recent rates at about 5-15% p.a. which is also documented. I have readded this information in a way that expresses this.

3. The discussion of American monetary history unaccountably focuses on the events of the early 1970’s. Replaced by a better written and more general and informative overview of the gold and silver standards in US history.

This was an attempt to compromise with RandomP who wanted to remove any and all reference to gold being used as money.

4. The discussion of the current minting of gold and silver coins is expanded and put into appropriate context (an investment vehicle, not for use as money).

gold is used as money, see [www.goldmoney.com] amongst many many others. Gold and silver coins also often have a denomination stamped on them and are in fact leagle tender. See Canadian Gold Maple Leaf and American Gold Eagle at 50 of their respective dollars. Bags of "junk silver" which are U.S. dimes, quarters, etc. are available currently at a slight discount to their spot silver value.

Also, if the USD undergoes hyperinflation, there may very well be a return to the "not so very old" tradition of using metals as money. Why? because governments can't steal the value out of it.

5. Today, the U.S. Treasury values its gold at $42.2222 per troy ounce as stipulated by the Bretton Woods agreement.

Incorrect and deleted. The book value of gold in the US Treasury is $42.2/ounce. Book value is an accounting concept that often, as in this case, has no relation to market value, which is the concept a reasonable person would think of when the word “values” is used.

So why not correct it to say the book value? It seems quite relevant to the topic of "gold as a measure of inflation" to see how the value was "booked" no so very long ago.

Besides being incorrect, the book value of gold held by the U.S. Treasury is irrelevant, an unimportant bit of trivia. Kitteneatkitten 21:45, 1 July 2006 (UTC)

"Populist agitation against the commodity currency and the resulting deflation, together with recognition of the benefits of fiat currency, has led every major government in the world to cease using either gold or silver standards for their currencies." what a load of crap. Show me one person who has ever supported the debasemnt of currency. Not even politicions would come out and say that as they all know what happened when Marie Antionett (sp) said "Let them eat cake". The benifits of fiat currency is that polititions can spend more than they earn by simply printing more money. It is that very fact that Sir Issac Newton realised when he was setting up the monetary system for Britian and why he made the government back their currency with physical metal.

I have removed your repeated use of "commodity" as it presents an anti "metal as money" slant. Please bear in mind that this is supposed to be discussing gold as a measure of inflation and not be discribing in any way why it should not be considered money (which it is by a majority of people on this earth if only the chinese, indians and arabs do).

Carbonate 07:43, 2 July 2006 (UTC)

Carbonate: there has been populist agitation in favor of debasement, though of course they don't phrase it as such. For example, the free silver movement of the late 19th/early 20th century, and with it the cross of gold speech. Plus, the support for freiwirtschaft. Now, I would agree that such movements are totally clueless -- easy money will not stiff lenders, but make them revise up interest rates to account for the future devaluation. But there has historically been (ill-founded) populist support for debasement. MrVoluntarist 13:36, 6 July 2006 (UTC)

This article is currently a disgrace, given the undue weight given to crazy conspiracy theories and the lunatic economic theories perpetuated by gold swindlers. It needs substantial work. Before editing this article, it is imperitive that editors read the entirety of our guilding policies - WP:V, WP:OR and WP:NPOV. Hipocrite - «Talk» 13:08, 6 July 2006 (UTC)

The idea that inflation is reflected in gold's price is a lunatic theory? Tell that to any financial advisor who will tell you gold is good as a long term inflation hedge. In contrast, peak oil is regarded as crankish by any competent advisor (just tell her you want to invest a significant amount in making money off the "peak") yet that hasn't bothered the people working on that article. MrVoluntarist 13:36, 6 July 2006 (UTC)

This is not an article about gold investing. For your personal theories about gold being a good investment, please use not-wikipedia. For information on what is appropriate content for article talk pages, please read WP:TALK. Thanks. Hipocrite - «Talk» 13:48, 6 July 2006 (UTC)

You're giving me the edit note "Go away"? Excuse me, if anyone's unfamiliar with Wikipedia's policies, it's you. Try to Be civil if you could. Now, if you would actually take a moment to read what I posted, you'll see I didn't say "gold is a good investment" nor did I offer my "personal theory". I said gold works as a long term hedge against inflation. If you want to do even better than keeping up with inflation, then obviously that's not for you, is it? And remember, that's what experts in the matter say, not my "personal theory". And responding to your untrue mischaracterizations is of course appropriate for talk pages, when you want to use that as the basis for editing. MrVoluntarist 14:04, 6 July 2006 (UTC)

Please Cite Reliable Sources for your claim that "experts say that gold works as a long term hedge against inflation." Make sure to review WP:RS before claiming something is a reliable source, paying specific and close attention to the section entitled "Issues to look out for," with extra-double-plus attention to "Do they have a ... conflict of interest" Hipocrite - «Talk» 14:12, 6 July 2006 (UTC)

I hope I got the indenting right?? How about Bloomburg TV or MSNBC at least once every hour? Is that a good enough source? How about Adam Smith's "The Wealth of Nations"? How about J.P. Morgan? Warren Buffet? need I go on? You are ignorant and you haven't the faintest idea what you are talking about Hipocrite. Try going back in the archives or look at the mediation between RandomP and myself. Stop questioning facts that have already been cited. Carbonate 00:00, 7 July 2006 (UTC)

Please find an expert that can be cited per our WP:RS policy and quote them. There is no citation for this purported "Fact" currently in the history of anything. Hipocrite - «Talk» 00:03, 7 July 2006 (UTC)

Dude...this is the talk page. I haven't added anything to the article yet. I'm just trying to inform you of some pretty basic knowledge. I don't need to cite a source to remind you of this on the talk page. This is where we discuss things before edits, remember? When I get a chance, I'll dig up plenty of sources for you. In the mean time, you can avoid the "extra-double-plus" babytalk. Thank you for your polite behavior on the talk page.

Your request is appropriate for the talk page. However, by capitalizing letters, you're looking like it's innapropriate to claim anything on the talk page without a reliable source, which is clearly not true.

By the way, do you understand the difference between "gold is a good investment" and "gold is a good long-term inflation hedge" yet, or would you like me to elaborate? MrVoluntarist 14:21, 6 July 2006 (UTC)

There's no need for you to do anything but cite reliable sources for every claim you wish to include in the article. Hipocrite - «Talk» 14:27, 6 July 2006 (UTC)

Sure. I'll get on that. In the meantime, I'll be waiting for your apology for the "extra-double-plus" condescension, characterizing me as a crank espousing "personal theories", falsely claiming I said gold was a good investment, and telling me to "go away" in an edit note. I'm sure you will apologize for all of these things because you are aware it's the right thing you do. MrVoluntarist 14:30, 6 July 2006 (UTC)

I'm sorry I hurt your feelings with all of the above. Hipocrite - «Talk» 14:39, 6 July 2006 (UTC)

I am not going to rehash all discussion that has already occured about this section. All of the facts challanged by Hipocrite have already been cited. If you can't be bothered to read the discussion, don't challange the factual content of the article. 70.73.235.202 22:26, 6 July 2006 (UTC)

Please add inline citations to the facts, please. There is no citation for any of them that I saw in the history of this talk page. Hipocrite - «Talk» 23:21, 6 July 2006 (UTC)

Wow, here is a NPOV statement "This article is currently a disgrace, given the undue weight given to crazy conspiracy theories and the lunatic economic theories perpetuated by gold swindlers." Obviously Hipocrite has an adjenda and hasn't even bothered to check the most basic of facts like the quote. Enough information is presented that a simple google will turn up historical accounts of the J.P. Morgan whose name lives on almost 100 years after his death in one of the biggest banks in the world. Carbonate 23:55, 6 July 2006 (UTC)

I did not tag the quote with any tag. Hipocrite - «Talk» 23:58, 6 July 2006 (UTC)

Anti gold censors

I have updated the gold section to what had been discussed in the medation between RandomP and myself even tho there was little input on the RfC.

In another lame attempt to censor the current inflation issues faced by U.S., the graph that plotted the money supply was tagged as being copyrighted. I have created a new graph with data up to May 2006 and placed it in the public domain.

Carbonate 06:34, 13 July 2006 (UTC)

Tags:

A number of things stop banks from printing currency willy-nilly, and the book value of gold has no relevence. Please insert in-line citations for all fact tags before removing. Thanks. Hipocrite - «Talk» 12:43, 14 July 2006 (UTC)

Did you read the mediation? Carbonate 14:27, 14 July 2006 (UTC)

Would you like me to add myself to your meditation? If so, please ask the mediator if that is possible. I have lingering concerns beyond those you two hashed out - specifically, that you are adding in unsourced facts and origional research. Hipocrite - «Talk» 14:31, 14 July 2006 (UTC)

PS - I re-read the mediation - to the point where it fell apart. It was suggested you list the article at WP:RFC. You did. I believe both myself and another editor came as a result of your listing, and both believed the gold section was a disgrace. Hipocrite - «Talk» 14:33, 14 July 2006 (UTC)

Every fact in the current article was challenged by RandomP and subsequently sourced. Please quote what is origional research. Both of the new editors have also stated or made their prejudices against gold clear. Those prejudices do not belong in this article especially when they are applied in the form of cesuring relevant information. Carbonate 14:40, 14 July 2006 (UTC)

Please copy the citations for the 1% per annum figure presented in the mediation to this dissucsion. I want to see evidence that you have read what you say you have. Carbonate 14:43, 14 July 2006 (UTC)

"I am unable to find it in the book using the index and it would take me a week to reread it all. May I offer a link to Bill Bonner's website that states "As Mark Skousen showed in his book The Economics of a Pure Gold Standard, the global supply of gold has historically tended to grow 1-2% per year."" Not a WP:RS. Hipocrite - «Talk» 15:21, 14 July 2006 (UTC)

So now we have gone from unsourced to not a WP:RS. How does Mark Skousen's book not qualify as a valid reference? Carbonate 15:46, 14 July 2006 (UTC)

"Do the sources have an agenda or conflict of interest, strong views, or other bias which may color their report?" Hipocrite - «Talk» 15:55, 14 July 2006 (UTC)

You seem to have conviently left off the next sentence "However, that a source has strong views is not necessarily a reason not to use it, although editors should avoid using political groups with widely acknowledged extremist views, like Stormfront.org or Al-Qaeda". Are you suggesting an economics professor is akin to Al-Qaeda? Carbonate 16:26, 14 July 2006 (UTC)

I also doubt that a Ph.D. is going to have view that are more extream than "This article is currently a disgrace, given the undue weight given to crazy conspiracy theories and the lunatic economic theories perpetuated by gold swindlers." So tell me again about an agenda? Carbonate 16:30, 14 July 2006 (UTC)

Your book is published by the Mieses institute, which is a heavily biased institution. If you must insert disputed facts about gold into the article, please include attributions and citations. Thank you. Hipocrite - «Talk» 18:38, 15 July 2006 (UTC)

Do you intend to cite your facts, or are you just going to revert war over it? Hipocrite - «Talk» 19:49, 16 July 2006 (UTC)

Other authors have edited the content without tagging it. You seem to like the wikilawyering (given the number of 3RR complaints you have on your talk page) to get your agenda through (and you clearly have an agenda). Carbonate 16:38, 14 July 2006 (UTC)

Personal attacks are never acceptable. Do not engage in them. Hipocrite - «Talk» 18:38, 15 July 2006 (UTC)

Gold section is unacceptable

A critique

---

Gold and silver historically were the two metals most used as money, though no major economy does so now. Because of the costs of mining and processing gold and silver, these metals are not as prone to hyperinflation as fiat currency. Still, hyperinflation often did occur in nations that used gold and silver as their currency as a result of the debasement of their coinage, the process in which the gold and silver content of coins is reduced, sometimes to the point at which virtually no gold or silver is used at all in coins that were once at least 90% pure.

This paragraph doesn't start off too badly despite the attempt to minimize more than two millenia of history in an off hand way. The last sentence however tries to tie debasement and hyperinflation to the metal which is clearly not the case. The metal behind the currency never lost value but the wording is done in such a way as to make it seem like coins that were 90% pure were valueless.

Gold and silver, in one form or another, were used as money from at least 600 BC. Gold and silver coins continue to be minted all over the world, in particular in South Africa, Canada, China, Australia and the United States. These coins are a convenient way to invest in these metals. In the early United States, the gold and silver coins of other nations, in particular Spain, were among the most common types of money, in particular those used for foreign trade. The term "2 bits" comes from an spanish coin that has been cut in to eight pieces.

The first sentence is a copy and paste from the original content but after that we seem to go off the topic and start talking about coins from various parts of the world. This material is covered in other articles and is only used to water down the longevity of golds store of value as measured in millenia (again).

The use of metals like gold and silver as money became unpopular because as Western economies expanded faster than the supply of gold and silver following the Industrial Revolution, deflation was the frequent result. Deflation, especially rapid and unexpected deflation, causes great distress for debtors, who must repay their loans with increasingly valuable money.

Western economies are less than a third of the people on this planet and this tainting the content with an anglo american perspective. The distress of debtors is unrelated to gold as a measure of inflation and its only purpose is to inject a socialist reason for shunning gold.

Typical of other Western countries, at some point or another, the United States has used a de jure fiat currency, a real gold standard, a real silver standard, hybrid systems in which the dollar was officially backed by gold and/or silver but restrictions on convertibility of paper money to the metals meant the dollar was de facto a fiat currency.

Now a gold standard is being placed alongside fiat currency in a convoluted way. There is no need for language like "de jure" and "de facto" in an english article except to make the author sound authoritative. This one sentence paragrapd says nothing of value and is poor style as well.

The United States dollar stopped being even a de jure gold-standard currency in 1972 after Richard Nixon "closed the gold window" following French demands that the United States exchange gold for the US dollars held by its central bank.

Again a gold standard is being put down with language like "de jure" and the superiority of the U.S. dollar emphasized in direct opposition to the point of this section.

Not one paragraph is free of "anti gold" POV and the content is sturctured to preclude the use of gold as a measure of inflation. This is inline with the opinions stated on this discussion page by user:kitteneatkitten. This content is disgraceful and if it isn't fixed I will be submitting to arbcom. Carbonate 17:56, 17 July 2006 (UTC)

Please do. Hipocrite - «Talk» 13:37, 18 July 2006 (UTC)

Agreed. This article is a disgrace because of the aggressive editing of Austrian/goldbug types. There is little reason for an article about inflation to mention gold at all, yet you goldbugs want it everywhere.Kitteneatkitten 22:21, 25 July 2006 (UTC)

Gold is money. It is real money with a definable rate of inflation. The fed isn't even reporting the broad rate of inflaiton anymore which make it undefined. Whether you agree or not, the other side has to be represented in the article. I don't envey the position you may find yourself if this goes to arbcom and you loose, writing for the enemy. Carbonate 12:36, 1 August 2006 (UTC)

Is inflation inevitable?

Is inflation an invevitable condition of our international economy? Does it have discreet causes that can be addressed by public policy or coordinated efforts of consumers? I remember my first computer that cost over $1000 in 1974. My first PC nearly a decade later cost about the same but had 1,000 times the power and capabilities. My latest PC cost only $500 and is at least a million times better than those earlier models. It is a clear example of improvements in technology and manufacturing leading to much more product for actually much less money.

So if someone makes a breakthrough on fuel technology or cheap, long-lasting batteries, could we possibly anticipate a dramatic reduction in the cost of transportation?

I bought a Pontiac Firebird in 1991 for $13,000. Soon after GM dealers were offering Camaros (essentially similar car) for as low as $10,500. Then GM decided to redesign the car, shortening it somewhat, and possibly making a few other techological improvements and priced it at nearly $20,000. Was the price increase a result of the costs of retooling and redesign or just a way to increase their profit margins? The result was that fewer were sold (less demand at the higher price) and the product was recently discontinued. I wonder what would have happened had GM simply made minor changes instead of a total redesign. Could the price have stayed in the $11,000 to $12,000 range? Would it still be in production today? I note that the PT Cruiser still is sold in this low price range, although it isn't quite as popular as when it was first introduced.

Could we manage to keep inflation under control by simply keeping successful product lines in existence? Who would make that decision?

unsigned on 11:34, 28 July 2006 by User:Rrman

Electronics are the worst possible item to compare. Electronics benifit from miniaturization which nothing else does. Your car isn't 1cm long, your fruit isn't measured in milligrams and you don't live in a doll house. Electronics by their very nature are not valid to compare over time. Try substituting "a house" or "a loaf of bread" and see what conclusion you come to. The car example shows that prices of goods that consume quantities of material (iron ore, energy to reduce the ore, silica, energy to turn the silica in to glass, etc) are going up in price.

What you are really asking is, can we hide inflation with economies of scale. The answer is no. Economies of scale are a natural product of mass production (especially in electronics) and in your example the amortization of the development costs over more and more units. This is not deflation and it doesn't counter the effect of doubling the number of paper dollars in the world. Dollars (or whatever) have value because they are scarce. When you double the number of dollars, you halve the value of all of them. Unless of course you are in to hyperinflation in which case you more than halve the value of all the dollars.

I believ the US is on the verge of hyperinflation. Why? Because they have a triple deficit

• The fiscal deficit of about 300 billion per year
• The trade deficit of about 2 billion per day
• The social security deficit

And that doesn't even cover the goodwill "everyone in the world hates america" deficit.

A billion here and a billion there and pretty soon you are talking about real money - some U.S. Senator.

Carbonate 12:22, 1 August 2006 (UTC)

gold supply inflation

The formula for compound interest is

$A(t)=A_{0}\left(1+{\frac {r}{n}}\right)^{n\cdot t}$

Assuming that

• $n$ = compounding periods per year = 1
• $A_{0}$ = original amount = 1 ounce
• $A(t)$ = 145,000 tonnes = $4.66E9ounces$
• $t$ = 3000 years

$10^{\left({\frac {\log _{1}0(4.66E9)}{3000}}\right)}-1=r=0.007448$

Carbonate 12:01, 1 August 2006 (UTC)

On what do you base your estimate of there only having been one ounce of gold extracted 3000 years ago? And I'm not sure what the point of the calculation is. If economic growth significantly sped up, so would the investment in gold extraction, and with it, gold inflation. MrVoluntarist 18:19, 1 August 2006 (UTC)

Obviously the assumtion is wrong but it errs on the convervative side (increases the rate of inflation) and makes the calculations easier by elimiating A0. If you look on the gold page you will notice that 75% of all gold has been extracted in the last century and that the inflation rate for this last century has been much higher but your growth argument still does not hold. Hubbert peak theory applies to gold as much as to oil and eventually we will simply run out of easily mined reserves. Carbonate 22:29, 1 August 2006 (UTC)

Key word there: "easily" mined. If average world GDP growth were more like 25-30%, the incentives for finding gold would really, really skyrocket. This would drive people into researching ways to make "not easily mined" things become "easily mined". There are many gold mines currently uneconomical at current rates, and we haven't touched extraction of gold from ocean water or asteroids. Look on any standard astronomic table for the potential there. Unlike with Hubbert's Peak, gold doesn't suffer EROEI constraints.

As for the rate of growth: 75% extraction over a hundred years gives a 4-fold increase over that span, an inflation rate of 1.3%, though not much different from what you originally posted. MrVoluntarist 04:36, 2 August 2006 (UTC)

There are certian laws of physics/chemistry that prevent magical "research". The process of extracting gold from all the other junk in ore takes energy in the form of chemicals and it is unlikely that this will change. As you go after the lower grade ores, the deeper rock structures, etc. cost start to go up. I agree that a higher price will prompt more expendatures but consider also the lag time to develop these marginal reserves. The "easy" resources developed today can take a decade to bring in to production, marginal reserves that need to strip mine areas the size of small states are going to be more expensive, slower in to production and harder to certify on environmental issues. This applies to most non-renewable resources. As an aside, in the oil industry, technology has mostly enabled faster production which causes depleation to occur sooner with lower final volumes produced as more oil is left in place.

Beside these philosophical arguments, does the production rate over time calculation make sense? Carbonate 04:51, 2 August 2006 (UTC)

The reason I brought up EROEI constraints was to show energy costs don't constrain gold like they do energy. Energy has the limitation that the process must give more energy than you take out, but any amount of energy could be expended in gold extraction given sufficient market prices. As for research, its impact is not necessarily marginal like you indicate. One discovery could open up whole new avenues, completely redefining what counts as easily extractable. Once ocean extraction technology is good enough, the entire ocean, all at once, counts as easily extractable.

And given your numbers, you average rate of inflation is correct. MrVoluntarist 14:15, 2 August 2006 (UTC)

I would just like to point out that EROEI does not nessicarily have to be positive if you are able to convert one type of energy in to another. Consider a hydroelectric dam producing hydrogen or a nuclear plant in the tar sands.

The oceanic extraction that RandomP mentioned (Nautalis Resources as I recall) is basically planning to mine the ocean floor. This still has all of the conventional restrictions of capital deployment, labour and energy plus the burden of doing so under water. Did I mention I saw an interview on TV with the CEO of that company? It was interesting. Carbonate 01:45, 3 August 2006 (UTC)

I'm not talking about mining the floor. I'm talking about precipitating the diluted gold that exists in seawater, something like 0.0000001% of it by mass. The main barrier there is that the technology doesn't exist, not raising capital for it. MrVoluntarist 18:19, 3 August 2006 (UTC)

The fed and FOMC

I'm not sure the recent addition is suitable. For one it draws unsupported opinions about people by placing them in the dove or hawk categorys. I also disagree with having Greenspan as a hawk as he printed more money in his tenure than everyone before him combined.

Carbonate 00:57, 4 August 2006 (UTC)

Let's not make this article US-centric. It's about inflation in general, not inflation in the US. __earth ^(Talk) 02:44, 4 August 2006 (UTC)

I would like to but that isn't really possible in this instance. So many central banks use US dollars as a reserve currency, all economies are tied indirectly at least to the inflationary policies of the US Federal Reserve. Of course, that could change over the course of a week if the dollar tanks. I have actually done my best to include currencies like the pound and the denarius but my efforts have been labled "gold bug". Carbonate 12:22, 4 August 2006 (UTC)

I agree that the USD has a huge influence on the world economy but it'd be great to make this a reflection of positive economics. I'd prefer to have only the mechanics of inflation here. Meaning that, what is inflation (according to all schools to prevent dispute), what causes it, what's its effects, history of economics thoughts on inflation and some examples to illustration to make comprehension easier. Any other stuff like Fed, ECB, etc and its monetary policies influence over the world, should go to its respective pages. At most, it should go under "see also" sections. __earth ^(Talk) 13:17, 4 August 2006 (UTC)

So you want an article that doesn't mention the economic theories that have been prevelant for hundreds of years? You just want to discuss the new and trendy ideas that have not been proven over the course of centuries of application? You feel that the Austrian School doesn't count in this day and age because "its different this time"? You would like no one to mention the work of Adam Smith who is so respected he has a beer named after him? Carbonate 11:05, 7 August 2006 (UTC)

I said, just the theories related to economics, not American politics. Like I said, don't make it American centric. Like I said, let's talk about inflation on general, not inflation in the USA. If you wanna talk about inflation in the USA, go to the Economy of the USA.

Notice that I did not say we should discount any other schools' view on inflation. I fear you might have misread my message. __earth ^(Talk) 14:07, 7 August 2006 (UTC)

Fringe

[User:Kitteneatkitten] has suggested that I am vandalising this article by insisting on balanced content with fringe ideas that don't appear in any textbooks. I would like him to explain how the ideas of Adam Smith constitute fringe. J.P Morgan Chase is one of the largest banks in the world and part owner of the Federal Reserve. J.P. Morgan was a successful and well respected banker. These people are not fringe by any definition of the word. I would also be interested in how he justifies the oppinion of billions of people on the Asian continent constitute a minority.

I understand that you don't agree with me Kitteneatkitten, but many others do and you should not be putting people down by dismissing them and calling them right wing "goldbugs". Everyone is entitled to their opinion and to have their ideas respected. I feel you have done nothing but disrespect my freedoms by belittleing me and censuring my content. If you wish to express your ideas I encourage you to do so but not at the expense of mine. Carbonate 05:57, 6 August 2006 (UTC)

The use of term "goldbug" is not derogatory, many people indentify their investment views this way. I did not remove Adam Smith's theory. J.P. Morgan was not an modern economist, and even if he were, one of his random polemical quips attacking the Federal Reserve has not place in the section about the measurement of inflation.

Your wholesale removal of my edits, which were great improvements on the previous content, because they disrupt "balance" certainly was vandalism. Go ahead an improve my changes, if you can, but that wasn't what you did. You simply destroyed my work.

I have no idea what you mean by "oppinion of billions of people on the Asian continent." Kitteneatkitten 03:15, 10 August 2006 (UTC)

An analogy

What happens when you inflate a tire? It gets bigger. Tires can get bigger for other reasons, heating of the air for example (which is an increase in velocity of the air) but when one inflates a tire one is generally at a service station and using a pump to add air. The same is true for the economy. Inflating the money supply makes prices bigger. Inflation is an increase in the money supply. It is not a result of it direct or otherwise. When the money supply is inflated, prices get bigger. Other things like money velocity and shortages can make prices bigger but it is the change in money supply that delivers real results. You wouldn't try to make your tire bigger with a hair dryer would you?

Carbonate 04:50, 7 August 2006 (UTC)

Gold

Reviewing this page, the concerns about the POV and OR nature of the gold section are numerous and repeated. Some of the facts that do not appear to be appropriately sourced to me include:

• The supply of gold is reasonably constant.

Do you dispute the math above?

You engaging in math is origional research. JBKramer 16:41, 8 August 2006 (UTC)

• • This is due to the costs of mining and processing.

Provide an example of gold that costs nothing to mine or process

It is not my obligation to prove negatives - you must provide reliable sources for all of your facts. JBKramer 16:41, 8 August 2006 (UTC)

• The above ground gold supply is estimated at about 145,000 tonnes.

Sourced from gold, did you not even do basic research?

Thank you. I have cited this information. JBKramer 16:41, 8 August 2006 (UTC)

• • The rate of inflation of that gold supply over the last three millenia can not have exceded 1% per annum.

The math is laid out in this discussion. Please detail your questions there

Engaging in math, again, is origional research. JBKramer 16:41, 8 August 2006 (UTC)

The following presentation uses weasel words, and is not acceptable:

• Some expect that the value of gold should remain reasonably constant.

I uses weasle words because it was written by anti gold people.

Please fix it before reinserting it. JBKramer 16:41, 8 August 2006 (UTC)

Why don't you fix it? Deletion is not acceptable. Carbonate 17:25, 8 August 2006 (UTC)

Because I don't think it's accurate. If I were to write it I would say that "there are a limited number of individuals, commonly called goldbugs that believe that the value of gold should remain reasonably constant, thus providing a measure of inflation. The vast majority of economists disagree, and no reputable, current economists use gold to measure inflation." I expect this would make you more angry than just removing it. JBKramer 18:07, 8 August 2006 (UTC)

The following sentence is antiquated and has no relevence in an article about inflation. Please include your information in the article about the Federal Reserve.

• In 1913, J. P. Morgan said before the House of Representatives "Gold is money, and nothing else." in opposition to the creation of the Federal Reserve.

In conclusion, this section requires substantial work before it can be included, and its present, unsourced, unnatributed polemical state is not acceptable. Please correct the sourcing and attribution. JBKramer 16:21, 8 August 2006 (UTC)

You have not done even basic research or read the extensive discussions.

Carbonate 16:38, 8 August 2006 (UTC)

I have fully reviewed the talk pages in question. JBKramer 16:41, 8 August 2006 (UTC)

JBK: math is not original research. If you show the result of a simple calculation based on sourced figures, that's perfectly acceptable. MrVoluntarist 20:04, 8 August 2006 (UTC)

CFP group

Is the CFP Group, a gold selling service, a reliaible source for the amount of gold in the world? CF [2]? JBKramer 16:42, 8 August 2006 (UTC)

No, it is not. Companies that sell gold have an interest in promoting the metal as an investment, and are not reliable sources for information relating to the supply and demand for the commodity.Kitteneatkitten 00:08, 10 August 2006 (UTC)

Inlcuding gold inflation info

Probably the best way to include the gold/inflation info that you want, Carbonite, is to find notable people who say the things you want said, and then quote them, without doing any math at all. Could you find some notable goldbugs that agree with you and quote them? JBKramer 16:47, 8 August 2006 (UTC)

Did you read the discussions? It has already been listed so obviously you have not. Carbonate 17:23, 8 August 2006 (UTC)

Like I said, "quote" them. You are obviously saying what they say, all you need to do is say who said it. Thanks. JBKramer 18:05, 8 August 2006 (UTC)

Vandalism of this Article by Carbonate

The reason this article is such a disgrace, despite the best effort of many editors, is that Gold-obsessed editors have repeatedly reverted other edits, making what should be a straightforward encyclopedia article into a disorganized and incoherent jumble of paragraphs.

Some particular problems:

• There are only two ways inflation is commonly measured: price indexes and GDP deflators. The other uses are historical artifacts outside the strange world of libertarian think-tanks and for-profit companies that sell and promote gold as an investment.

• The use of the word "Neo-Keynsian." This is not a word you will ever find in a reputable economics textbook.

• Huge numbers of random barely-sensical and unsourced statements. E.g.: "Neo-Keynesians would say that the money supply may increase without inflation occurring."

These errors will remain as long as Carbonate aggressively reverts attempts to improve this article.Kitteneatkitten 00:06, 10 August 2006 (UTC)

Article Is Much Worse Now Than Two Years Ago

Have a look for yourself.

http://en.wikipedia.org/enwiki/w/index.php?title=Inflation&oldid=4219789

Two years of edits have made the article worse. It was fine then, it is a disgrace now. The ideological edits made by libertarians so the article reflects their various pet theories is the only cause I can identify.

Kitteneatkitten 03:20, 10 August 2006 (UTC)

Easy fix to this ..., now it's just as good as it was then. JBKramer 11:55, 10 August 2006 (UTC)

I support this change. Thanks. Kitteneatkitten 04:41, 14 August 2006 (UTC)

Kittem, I'm glad you now support mentioning gold as a measure of inflation. It's time you came around. MrVoluntarist 13:36, 10 August 2006 (UTC)

I never opposed it. But efforts to imply that it is a major method are misleading. Kitteneatkitten 04:41, 14 August 2006 (UTC)

I also think the version from two years ago was better. Terjepetersen 11:08, 15 September 2006 (UTC)

Money Supply Increases

Much attention has been given to the premise that inflation of the money supply is the cause of inflation. This I agree with whole-heartedly, and I absolutely can't stand the Keynesian obfuscation of simple economic concepts.

However--and I may be guilty of not reading word for word the entire talk page--little time is given to the mechanisms by which the money supply is increased. Elucidating these may help many people who are struggling with our definitions. Money supply increase, they ask. What does that mean, and how is it increased?

As far as I'm aware, its accomplished in two ways:

1) "Printing" more money
2) Fractional-reserve banking

Now I have to agree that most of our money isn't really printed, but mainly exists as ones and zeros in computers. But for all intents and purposes, it it just created out of nothing. I guess more specifically goverments tend to claim that the newly created money is backed by its ability to tax its citizens, but there is no commodity backing, and thus nothing really prevents governments/central bankers from turning off the lights, locking the doors, and letting the printing presses run forever.

Second, and this is important, the institution of fractional-reserve banking (something that was considered criminal a hundred and fifty years ago in the U.S.) goes far in increasing the money supply. Financial institutions need only hold a small reserve of actual deposits while they loan the balance out. One institution doing this may not necessarily inflate the money supply, although it does constitute a double claim against the deposited money, but many institutions doing this over the same initial deposit WILL increase the money supply.

And as far as measuring inflation goes, doesn't the Federal Reserve publish numbers (M1, M2, etc.) about certain aspects of the money supply. It was my understanding that a clear picture of inflation could be gleaned by just simply doing some addition or subtraction. Now, however, the Fed has decided to stop publishing M3. I can't see why this needs to be a secret but its no longer available to us mortals as I understand.

- Bogomips (I'll register later)

I suggest that fringe economic theories like the ones you present above are better dealt at the appropriate pages. JBKramer 21:02, 10 August 2006 (UTC)

What, in particular, is "fringe" here? And how does it not pertain to the concept of inflation? Expansion of the money supply seems to be accepted as the cause of Inflation. Do we want to just skip over the exact mechanisms employed to expand the money supply? Seems like an encyclopedic entry on inflation would be incomplete without addressing exactly how monetary expansion occurs.

"Much attention has been given to the premise that inflation of the money supply is the cause of inflation. This I agree with whole-heartedly" is fringe. JBKramer 17:37, 11 August 2006 (UTC)

Are you high? The new Fed Chairman recently said something along the lines of "the notion that inflation is always and everywhere a monetary phenomenon is no longer a controversial theory." MrVoluntarist 17:06, 14 August 2006 (UTC)

You have confused the fed chairman with Milton Friedman. Both have substantially changed their views in light of the 1990s, which pretty much proved inflation is coorelated to rates and growth. Alan Greenspan, in fact, famously recanted his objectivist leanings with "the Fed stands ready to provide all necessary liquidity." JBKramer 17:20, 14 August 2006 (UTC)

Actually, no, I didn't confuse them. But even if it were only Friedman who said it, he's not "fringe". No one calls Friedman a "crank", even if they disagree with his views. And I'm not sure I'd put too much stock in what Greenspan states in public. He's aware of what impact his statements can have, and when asked, he still claims to stand by what he said about the gold standard 40-some years ago, even though he doesn't reveal it in action. MrVoluntarist 17:36, 14 August 2006 (UTC)

Not so much fringe (like the theories of the goldbugs) as simply wrong. There is no "the cause of inflation." It is simply one of several possible causes. It makes as much sense as talking about increasing in the velocity of money as "the cause of inflation." Japan recently has experienced delation while greatly expanding its money supply.Kitteneatkitten 04:50, 14 August 2006 (UTC)

This POV is already explained at Fiat Money and does not need to be explained again. Nothing makes editing more painful faster than having to work through the same issued in several articles, rather than one article. Increasing the money supply can occur through a variety of mechanisms. The one most commonly chosen is an open market operation by a central bank, where by debt is retired by the creation of new currency, backed by the authority of the central bank itself. However, money can also be created in specie backed economies - and in fact has been repeatedly over time, through new sources of specie, mined or stolen, through debasement and reminting, through the switch to fractional reserves, through diluting of reserves, by the issuance of debt which is legal tender at a later point in the future and so on. None of the family of means of increasingly the money supply is relevant to the quantity theory of money, which was promulgated before there was a central bank, and in a specie backed economy as an argument against mercantilism. Stirling Newberry 19:39, 14 August 2006 (UTC)

Wow, quite a change in the article. But I notice that all the monetary theory view as to how inflation is measured has been removed. Either one of you kainsians can do it or I would be happy to.

As for how the money supply increases, Newberry seems to be a little out of date, as although what he says was true, the fashionalbe thing these days is Repurchase Agreements which have their own wiki article. That page should be linked to but not regurgitated.

So who is going to balance the article with the monetary viewpoint? Carbonate 17:12, 17 August 2006 (UTC)

Monetarism

So if monetarisim relates inflation to the amount of money, why does the formula not include the amount of money? In fact, that formula looks an aweful lot like an expression of the simple supply/demand curve! And then they explain it all by saying supply and demand for products ergo money supply?

Carbonate 01:41, 18 August 2006 (UTC)

Zimbabwee

• [3]
• [4]

Carbonate 22:38, 21 August 2006 (UTC)

inflation is a rise in the aggregate money supply

Anoynmous alledges that "inflation is a rise in the aggregate money supply." Can someone cite this from reliable sources? JBKramer 16:24, 24 August 2006 (UTC)

Anonymous cited Websters dictonary as his source in his most recent third revert. Websters' definition is here, and cooresponds to the definition that myself, Sterling and Kitten are using. JBKramer 17:57, 24 August 2006 (UTC)

Newer editions of Websters have changed to this definition. Historically, Websters used the definition relating to money suplly with only a mention of a relationship to rising prices.

"If the American people ever allow private banks to control the issue of currency, first by inflation, then by deflation, the banks and corporations that will grow up around them will deprive the people of all property until their children wake up homeless on the continent their fathers conquered." Thomas Jefferson

I think this quote illustates that the founders understood inflation to be a monetary phenomenon. If you can't see that, well, you obviously have a biased POV. — Preceding unsigned comment added by 66.206.174.80 (talk • contribs) 18:24, 24 August 2006 (UTC)

That is a quote of limited historical interest only, and Jefferson was not an economist. Could you cite a reliable current source that states inflation is a rise in the aggregate money supply? If websters has been convinced by mainstream economics, perhaps we should use the commonly accepted definition? Also, as I wrote on your talk page, you have violated the three revert rule, and will likley be blocked, unless you revert your own edit. JBKramer 18:30, 24 August 2006

Thanks for the advice about the revert rule, I'll read up on these rules and will endevour not to break them again. As to your dismisal of my citation of a historical reference to inflation, your point is somewhat lost on me. I was just illustating the fact that the meaning of the word "inflation" had been historically given meaning that relates to a monetary phenomenon. The fact that the semantical interpretation of the word has changed with time is really of little concern to me. Attempts at changing the meaning of words and concepts has often been motivated by political agendas (particularly in the field of economics). Why else would such a profound word & concept (inflation) be relegated to terms such as "monetary base expansion"? Terms not easily grasped by the layman. Let's endevour to keep important concepts simple and not to obfuscate related concepts by pedantically over intellectualizing them.— Preceding unsigned comment added by 66.206.174.80 (talk • contribs)

Simple and wrong isn't the objective. Inflation is almost universally defined by purchasing power relative to some commodity benchmark, and is so defined in Barro's Macro-economics text book, and he's a conservative, perhaps the leading conservative, theoretical macro-economist. Monetarism is dead, killed by the empirical data of the 1990's when the money supply by all measures rose far faster than inflation by any measure. This is because in Friedman's conception velocity and transactions were essentially fixed in size and demand and money supply make up the free variables. If there is a dramatic expansion of the number of transactions, a reduction in velocity of money, then an increase in money supply will cause neither a change in relative prices, or a change in the demand for money relative to the demand for interest and commodities (which you seem to not get - the neo-classical general equilibrium model and the IS-LM model rest on a three, not two, valued supply and demand curve. Stirling Newberry 05:18, 25 August 2006 (UTC)

If you truly intend to discuss instead of reverting, I suggest you stop reverting now, and gather consensus for your changes from users that are not single purpose editors. Your version does not mesh with the current accepted definition of inflation. You have not cited your sources for your innacurate definition. The source you did cite used our version of the definition. JBKramer 20:17, 24 August 2006 (UTC)

I didn't imply in anyway an intention of discussing versus reverting, and I consider the definition of inflation to be a single purpose endevor. I'll be happy to continously change this definition to the correct one (something I view as a very honerable pursuit) as long as I have access to this site on any computer I can get my hands on. I also have plenty of free time in my life to make this a life-long mission as my understanding of economics has provided me with an overabundance of free time. — Preceding unsigned comment added by 67.9.190.5 (talk • contribs)

Your pledge to edit this article in bad faith is noted. JBKramer 22:06, 24 August 2006 (UTC)

Rversion

I reverted the most recent changes because embedded in them was the statement that Robert Lucas "found no significant relation between Money growth and growth." This is totally and completly innacurate. Lucas found that "Unanticipated monetary expansions... can stimulate production as, symmetrically, unanticipated contractions can induce depression." JBKramer 14:30, 31 August 2006 (UTC)

I laugh out loud at the Chevallier graph. It finds an inverse coorelation between the difference m3 growth rate and economic growth rate (%delta(m3)-%delta(GDP)) and the economics growth rate (%delta(GDP)). How could such a coorelation POSSIBLY exist? Perhaps because %delta(GDP) is in both equations? JBKramer 14:37, 31 August 2006 (UTC)

Thank you JBKramer for protecting this article against the goldbug vandel(s). Kitteneatkitten 23:45, 31 August 2006 (UTC)

This article still misrepresents and under represents the monetary view. I expect that between the two of you it will be corrected or I will revert back to an early July version of this article. Welcome to Writing for the enemy. Carbonate 06:15, 1 September 2006 (UTC)

This article is fully descriptive currrently. JBKramer 06:51, 1 September 2006 (UTC)

Don't threaten a revert war, you will lose it. If anything the economics sections of wikipedia give far, far, far more coverage to monetarist, austrian and "supply side" views than is present in current literature. Stirling Newberry 11:13, 1 September 2006 (UTC)

The monetary section is inaccurate, the equation given is for the supply demand curve and does not include any factors of money supply despite their being described in the text. There are a number of inaccuracies that must be addressed. And by the way, it doesn't matter how much representation is given to this subject in the economics section, we are talking about inflation in this article and the monetary view has to be expressed as it relates to inflation for the article to be neutral. So go ahead oh wonderful deleters of content, time for you to create something. Carbonate 20:46, 2 September 2006 (UTC)

The good being discussed in the equation is money. What concrete changes do you propose? JBKramer 22:21, 2 September 2006 (UTC)

References

This page really needs a bibliography. Anyone interested in compiling it? Stirling Newberry 15:08, 1 September 2006 (UTC)

"Monetary Phenominon"

"In the long run, inflation is a Monetary Phenominon" is a statement without meaning - In the long run, we are all dead. "In the long run" does not mean the same thing as "Ultimately." JBKramer 21:20, 13 September 2006 (UTC)

Alan Greenspan says: "Although many factors may affect inflation in the short-run, inflation in the long-run, it is important to remind ourselves, is a monetary phenomenon."; Jean-Claude Trichet: "because in the long run inflation is a monetary phenomenon"; Ben Bernanke: "Ultimately, inflation is a monetary phenomenon, as suggested by Milton Friedman's famous dictum." These are as mainstream and influential economists as possible, and, as it’s showed, sources fully support the statement. -- Vision Thing -- 08:59, 14 September 2006 (UTC)

PPI vs. M2 [5]

Keynesians

Can someone provide a source that Keynesian's view on inflation is a mainstream today? -- Vision Thing -- 12:45, 15 September 2006 (UTC)

You already did so - [6]. JBKramer 13:11, 15 September 2006 (UTC)

Can you quote relevant part? -- Vision Thing -- 13:27, 15 September 2006 (UTC)

See both Gordon and Blinder on the issue. Stirling Newberry 13:52, 15 September 2006 (UTC)

Missing from this page

Is a good description of the econometrics of inflation. Since this is more important to more readers than arguments over classical political economy, we should have such a section. Creating a market basket, deciding what is price increase from inflation and what represents productivity, baselining, seasonal adjustments - these are all issues where there are pervasive misunderstandings and errors in reporting.

Stirling Newberry 03:51, 18 September 2006 (UTC)

Wow

This is the first discussion I've ever read. It is really scary. It has lowered my confidence in Wikipedia articles considerably. I admire the restraint most of the editors show, but is there no way to shut down someone who is truly disruptive and will not let go? CasualReader 17:01, 20 September 2006 (UTC)

POV

This article is not the place for essays, opinions, or criticism. Terms like "dogmatic" do not belong here (under "Effectiveness of interest policy") and this article should only contain descriptions of the topic and NPOV descriptions of different theories. Be careful to only add facts to the article. I'll get around to some edits and organization soon. ~Kruck 17:41, 2 October 2006 (UTC)

If not here...

Then where? I came to this artcle hoping to find examples of cost differences -- essentially, time-travellers exchange rates pretty much -- out of interest after reading the article on History of pizza, where it states that the first pizzas sold at Lombardi's in NYC cost a nickel, but since many people couldn't afford that, they sold by the slice.

The idea of people not being able to afford a nickel when we commonly throw pennies away now (and some countries with a dollar system have stopped having one cent pieces) was pretty extreme, and so I wanted to be able to look up the purchasing power of different amounts.

So, if this article doesn't go this direction with any of it, can someone suggest which article might? Personally, I think such information is just as on topic as the theories on why inflation happens.

Please sign your conversations with 4 ~'s. You'll find that the external links have calculators of prices in different years. You are in the right place, but I don't think the answers you're looking for can be expressed well in words. ~Kruck 05:41, 16 October 2006 (UTC)

Graph

This article really needs some kind of graph for support. Does anyone agree that an image like [[Image:Supply-and-demand.svg]] from the Supply and demand article is an appropriate way to display inflation? My econ professor at Ohio State University uses graphs like these to give a basic idea for what happened in many historical situations. I think we could use several in this article as well. ~Kruck 05:41, 16 October 2006 (UTC)

There was a graph but the keynsians forced its removal to keep their notions on top...

U.S. Money Supply from 1959-2006

Carbonate 17:02, 23 October 2006 (UTC)

I would like to note that the next time I update the graph of the money supply, I will incorporate the recent changes made to the legend background colour made by another editor. Thanks for the interim fix. Carbonate 04:46, 6 November 2006 (UTC)

Roman

What can be suggested for the pre-modern inflation tendencies, generally the reduction in the silver content of say the denarius that took place from the mid 1st to the 3rd century, in which case the coin was replaced by theantonninus, or the english penny which was silver, then a large and finally a small bronze coin. Or the chinese over issuence of paper money especially uner the Yuan(Mongol) rulers, where the coinage value fall as the paper money in circulation outstripped supply. Enlil Ninlil 05:56, 17 October 2006 (UTC)

Why go back that far? The US Penny has long since exceded 1 cent's worth of copper...Carbonate 17:04, 23 October 2006 (UTC)

Why cause this topic is about inflation mate. Enlil Ninlil 07:14, 1 November 2006 (UTC)

Either Carbonate doesn't know what he is talking about or he doesn't speak English because the penny exceeding one cent of copper just occured for the first time a few months ago, I don't know where he pulled the whole "long since" thing, out of his ass I suppose.- Moshe Constantine Hassan Al-Silverburg | Talk 05:33, 3 November 2006 (UTC)

From what I know a basic copper 1 cent coin was worth less it's weight in copper, that is why it was changed to copper plated zinc I think to save on cost. And some souces state they cost 0.7 cents to make. This is debatable. But Im talking about the slow reduction of silver and an increase in prices. Enlil Ninlil 06:59, 3 November 2006 (UTC)

The problem is that a valuation is stamped on the penny. Being worth a fraction of a dollar, as the dollar falls in value due to the rampant printing of them (tho this has become a misnomer as it is all done electronically these days) the metal that is used in the coin takes more and more dollars to buy. Inflation causes the value of the metal to exceed the value of the coin and that leads to the goverment debasing the coin. The best solution I have heard to this comes in 2 parts

• 1 - Stop stamping dollar values on the coins. Instead, make them like tokens with an exchange rate that is published by the government.
• 2 - Prohibit the exchange rate from moving down. The published exchange rate of the token should not be allowed to fall and always be maintained above "dollar" value of the metal. This keeps people from hording the coins for their meteal and assures the people that they won't be exposed to deflation (which hasn't happened in the US since WW II by the way).

Carbonate 04:43, 6 November 2006 (UTC)

History of Inflation

Hello there Stirling Newberry, hope this version is more to your satisfaction. I actually don't find all that much of my previous addition to be "POV" as I was for the most part only quoting what other people had said. The splitting of the history of inflation into three periods isn't POV either; it's based on simply looking at the graph, which goes slowly down from 1257 to 1717, stays flat from 1717 to 1933, and then drops like a rock. My graph is as far as I know original work, but from public sources, and I think it is relevant; I haven't seen anything published over as long a time period as that anywhere else (maybe back to the 1600s somewhere). -- Mika

131.215.242.164 08:54, 28 December 2006 (UTC)

Wikipedia is not a place for original research, nor for POV essays. The history of inflation is a matter of a great deal of research and dispute. "The Graph" is not an objective fact, but an interpolation based on rather complex research and a number of assumptions. Other charts of historical inflation lead to very different conclusions. I've reverted again because it is still uncited, original research POV. And bad research at that.

Stirling Newberry 23:10, 28 December 2006 (UTC)

Maybe your standards for "complex research" are different from mine? Are you objecting to the correlation of the price dips with the historical events? The graph of the gold price in English pounds/English pound price in grams of gold is not very complex research, as it is simply a juxtaposition of three time series: the English government "official gold price", a time series of the market gold price in London, and recent data from xe.com. I can certainly generate proper references for this data if it helps any. My goal was to add some information on historical inflation levels, and I know of no other time series that could express them over as long a time period. The gold price is definitely an imperfect way of measuring inflation, no one would argue with that. But this is about the only time series you can find anywhere that sheds any light on inflation over such long time spans. In any case I think the article is incomplete: you say the history of inflation is "a matter of a great deal of research and dispute"---does that disqualify it from Wikipedia?

Based on the paragraphs that I wrote and you reverted I am sure you can tell that my goal was to express to the reader that while inflation or currency debasement is nothing new, the slow, unrelenting erosion of the value of the currency is a modern phenomenon, essentially limited to the 20th century (maybe the 21st too). I have never seen data to contradict this statement and would respectfully add that any article on inflation is incomplete without this observation.

131.215.242.164 10:51, 30 December 2006 (UTC)

A deletion without explanation

A user designated 146.115.40.86 deleted the section of this article called Measures of inflation. I have restored this section and am now asking for discussion: Should this section stay or be deleted? My vote is "keep." ProfessorPaul 00:52, 7 January 2007 (UTC)

No mention of Fisher Equation?

I think it an important inflation-related concept. __earth ^(Talk) 14:26, 24 January 2007 (UTC)

intro definition

"Other theories, such as those of the Austrian school of economics, believe that an inflation of the general price level and of specific prices is a result from an increase in the supply of money by central banking authorities." This is wrong. Austrians define inflation as any increase of the money supply over specie. Pricing levels have nothing to do with this. Intangible2.0 16:30, 5 February 2007 (UTC)

You are confusing word with concept, and making a far too sweeping claim about how Austrians define “inflation”. The word “inflation”, like many other words, has multiple definitions. In the sentence that you quote, the claim made is correct, even though expressed in language different from that which would be used by Rothbard &alii. And Austrians such as McCulloch have accepted the more popular meaning of “inflation”, thinking that it is a waste of time and effort to fight for an old use when the ideas can be easily communicated in language more familiar to most audiences. —SlamDiego 07:01, 15 February 2007 (UTC)

Austrian Reduction

The subsection on the Austrian view was indeed arguably overly long (and it contained a perfectly egregious confusion of word with concept in its use of “inflation”). But the reduction “in relation to influence” was quite inappropriate. The Austrian view very much informed mainstream economics. That influence has been somewhat disguised by the way in which, during the Keynesian hegemony, there was an attempt to write the Austrians out of the history of thought. But a real familiarity with the primary sources (including Keynes's General Theory!) would know better. —SlamDiego 06:49, 15 February 2007 (UTC)

Austrians are well aware they are a minority (one might argue a tiny minority) of economics thought today. Supporters of Austrian thought must read WP:NPOV before discussing Austrian thought in mainstream economics articles. Hipocrite - «Talk» 11:45, 15 February 2007 (UTC)

You are equivocating. You didn't remove the content based upon whether they were a minority; you removed it based upon a claim that they were not influential. The former claim would have been largely irrelevant; the latter was relevant but was also false. Parts of the Austrian view on inflation have very much influence the mainstream.

On the other hand, the article confused the Austrian view with some peculiar branches within it. For example, Hayek ultimately reject the much of the Mises view on deflation (to which Rothbard held).

What is needed is an accurate discussion of the Austrian view, which discussion should be of significantly greater length that the present discussion. —SlamDiego 00:34, 16 February 2007 (UTC)

Okay, what I have now written is at least an accurate representation of the Austrian School in general, as opposed to focussing upon beliefs that are both peculiar to a sub-camp and secondary in importance even within that sub-camp.

The section is still not proportionate in size to the influence that the Austrians have had on economic thought. One way of legitimately increasing that section size would be to note the effects on the thinking of Keynes and of others that the Austrian theory had. (The reader should not be greatly surprised to learn that Keynes, in his General Theory, explicitly mentions that it was from v. Mises that he learned that “nominal” values could have real effects. &c.) —SlamDiego 03:39, 16 February 2007 (UTC)

“the price level”

Definitions of terms for things that exist outside of theory — such as inflation — should be presented without avoidable theoretical baggage. There is certainly no need to presume that one can write meaningfully about “the price level” in order to define “inflation”. (It's quite appropriate to discuss the mainstream theoretical view in the body of the article, which discussion should surely involve one of and in terms of a price level.) There is, BTW, nothing peculiarly Austrian in rejecting the notion of the price level. —SlamDiego 00:50, 16 February 2007 (UTC)

Older definition

Hipocrite is objecting to mention of the original definition of “inflation” in the lede. His claim was that this was part of “undue weight provided austrians in the header”. Now, I am not wed to mentioning the original definition in the lede, but:

1. Here, again, there is nothing peculiarly Austrian in noting the older definition. I have certainly heard a Friedmanite do just this at the outset of a presentation.
2. Dictionaries still usually list the older definition.
3. Pre-Keynesian economic literature is more likely to use the older definition than the newer, and some users of Wikipedia are going to come trying to figure-out what the H_ll Hume or somesuch is saying. I think that users are well served by a header (or at least by a lede) that addresses this quickly. (The article in fact needs some discussion further on, to explain why the newer definition arose from the older, and why it supplanted the older.)

—SlamDiego 01:09, 16 February 2007 (UTC)

Paragraph errant

The subscetion entitled “Hedonic adjustments to measuring inflation” contains two paragraphs. The second of these, possibily with some further clean-up, belongs somewhere in this article, but it does not belong in that subsection. —SlamDiego 04:54, 23 February 2007 (UTC)

MikaNystrom's changes to the section on the Austrian School

MikaNystrom effected a change to the section on the Austrian School which replaced

Austrian School economists do not believe that production will simply rise to meet all this new demand, so that prices increase and the new purchasing power erodes.

with

Austrian School economists do not believe that production will simply rise to meet all this new demand, but that the effects of the price increase are distributed unequally between different goods and services, causing a permanent dislocation in the economy.

In effecting this changes (and other changes) MikaNystrom declares

The statement that Austrians believe prices will increase when money is added to the economy is untrue---the emphasis of Austrian theory is on real changes, not nominal ones.

Now, first and foremost, MikaNystrom seems to have lost sight of the subject of the article — general increases in prices. There is no point in having a section on the Austrian School if if does not focus upon that. Yet MikaNystrom had removed the explanation of such increases from the section!

The Austrian School does not merely emphasize real changes rather than nominal changes; it rejects the classical dichotomy. But that doesn't change the fact that this section either needs to give the Austrian School explanation for general increases in prices, or to be removed from the article as quite tangential! Moreover, the section already explicitly noted:

The Austrian School emphasizes that this process is not instantaneous, and does not ultimately lead to an equilibrium identical to the old except for some proportionate increase in prices; that “nominal” values thus have real effects.

(Since this article is not itself about such things as business “cycles”, there is a limit to the extent that such concerns should be labored in this article.)

To the sentence

More specifically, possessors of the additional money are held to react to their new purchasing power by changing their buying habits in a way that generally increases demand for goods and for services, thereby increasing prices.

MikaNystrom appended

in certain sectors of the economy.

The sentence had not claimed that the increases in demand would be uniform or universal; and, again, the section had gone on to state that the process

does not ultimately lead to an equilibrium identical to the old except for some proportionate increase in prices

I can look at tweaking this point to make it more explicit; but it is here that the exposition does and should address a point secondary to the subject of the article.

MikaNystrom's claim that “The statement that Austrians believe prices will increase when money is added to the economy is untrue” is at best misleading, on multiple levels. A thorough analysis would probably be book-length. —SlamDiego 13:05, 6 March 2007 (UTC)

The Austrians get a more than generous share of attention here on wikipedia - there is systematic bias of overcoverage of "supply side" and "austrian" economics. The long term inflation claim is emprically false and a disservice to our readers to insert - long term falls in the price of money are well known to long periods of history. Stirling Newberry 11:31, 7 March 2007 (UTC)

First, even if one accepted your claim that there is over-coverage of the Austrian School and your claim about the inflation “long term”, you reinflicted MikaNystrom's errors, and the bizarre claim about inflation allowing firms to cling to costs savings with your ham-handed reversion.

Second, the Austrian School is not over-covered. The importance of a school is not merely measured in terms of present population, but in terms of influence; and the Austrian School had considerable effect on economists who are not in that school.

Third, as to these claim about the “long term”, until someone defines “long” I regard them as rather empty, one way or another. I'm going to yank the claim in the article, pending better quantification. —SlamDiego 13:50, 8 March 2007 (UTC)

Authorization requested for adding: "Inflation´s monetary and non-monetary consequence".

I wish to add the following two sentences after the first sentence in the introduction on inflation.

"Inflation has a monetary and a non-monetary consequence under the current Historical Cost Accounting paradigm. Its monetary consequence is the destruction of the internal real value of all monetary items over time in an economy subject to inflation. The non-monetary consequence is the destruction of the internal real value of all constant real value non-monetary items (eg. retained income) valued at Historical Cost and not fully or never updated as a result of the application of the stable measuring unit assumption."

Reference:

Smith, Nicolaas J., RealValueAccounting.Com - The next step in our fundamental model of accounting, Lisbon, RealValueAccounting.Com, 2005. ISBN 972-9060-06-1 (Paperback) [7]

How does the process of authorization for additions to the inflation article work? Is this addition acceptable? Who can give this authorization?

Nicolaas Smith 18:32, 14 March 2007 (UTC)

Well, the process is usually Wikipedia: Be bold in updating pages, but in this case ... can you rephrase that in English, please? I wish I could give a suggestion, but lacking a PhD in Economics, I have no idea what you just wrote, so can't give further advice, for example if the heading is the best place for it, or if it would be better off in the article body somewhere. If you can simplify a bit while conveying the same meaning, that would be preferable. Thanks! --AnonEMouse ^(squeak) 18:38, 14 March 2007 (UTC)

Thank you AnonEMouse.

I also feel I should rather find a place for it in the article body. I will work on that.

Nicolaas Smith 18:50, 14 March 2007 (UTC)

Effects of inflation?

The only information on the effects of inflation comes under "problems of inflation" and it is very poor. I think that the effects of inflation should be a large component of this article.

Are you suggesting I put the monetary and non-monetary consequences of inflation under "problems of inflation"

Nicolaas Smith 07:51, 15 March 2007 (UTC)

I suggest you delete the "problems of inflation" paragraph altogether

Yes, you are rigth. It is a very weak paragraph. Problems of inflation can also be seen as the core of the inflation article. Especially when it is realized that inflation was always and everywhere and is always and everywhere the destruction of real value in monetary items of any kind and non-monetary items not updated or not fully updated over time. Problems of inflation should, in fact, be the bulk of this article and not the hardly non-existent paragraph it is now. Everybody fights inflation because of the problems of inflation. Strange is it not. What inflation is really all about hardly appears in this article.

Nicolaas Smith 18:56, 19 March 2007 (UTC)

Pre-modern inflation

Should there be a section that discussed inflation in pre-modern times? Historically issues like debasement of coinage had significant economic impact and often resulted in inflation.

--LeperColony 18:20, 24 May 2007 (UTC)

“ratex”

• Google search. —SlamDiego 00:13, 15 April 2007 (UTC)

capital goods price inflation

I found nothing on asset price or capital goods price inflation. WHy all this focus on the rise of consumption goods forgettting the inflation in asset prices ? for some articles about asset price inflation http://www.nber.org/papers/W9321 http://www.dbresearch.com/PROD/DBR_INTERNET_DE-PROD/PROD0000000000210917.PDF http://people.brandeis.edu/~cecchett/pdf/assetdfi.pdf

It s especially damaging since the last 20 years have seen low consumption goods inflation and high asset price inflation in the face of high monetary creation.

The introduction

"In mainstream economics, the word “inflation” refers to a general rise in prices measured against a standard level of purchasing power.

A standard level of purhcasing power. What a strange way of putting it. Needs to be simplified.

Chimbwidz 13:18, 1 July 2007 (UTC)