Inflation and Deflation of Price and Money Supply

[zolace]

Most of the people have no idea of what Inflation and Deflation means,and the way you describe it is for everyone to understand it. Thanks for the economical lesson.

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[baokychen]

Thanks for the knowledge 

[kjj]

Awesome.  Three contentless posts in a row from spammers padding their signature advertising numbers.

[DSF]

Finally someone cared enough to educate users who constantly talk about inflation without any idea what this term actually means.
Well done.

[billysweird]

Inflation is a term much maligned in today’s media, but correctly managed it is not necessarily a bad thing.  The European Central bank has as one of its objectives the management of inflation within the Eurozone area and this management is generally accepted as maintaining the inflation rate as close to 2% as is possible.  If inflation begins to rise above this magic figure then the ECB imposes credit restrictions via interest rate management and reels in economic activity back. If, on the other hand, inflation threatens to drop into negative territory and the ECB is afraid that this may stifle economic growth then they practice quantitative easing to increase the supply of money. Quantitative easing refers to the reduction of interest rates and controls and the printing of money, and that is one of the powers of a country: Countries have the capacity to print their own money. Bitcoin is fundamentally different to fiat money in that important respect.

[kjj]

Inflation is a term much maligned in today’s media, but correctly managed it is not necessarily a bad thing.  The European Central bank has as one of its objectives the management of inflation within the Eurozone area and this management is generally accepted as maintaining the inflation rate as close to 2% as is possible.  If inflation begins to rise above this magic figure then the ECB imposes credit restrictions via interest rate management and reels in economic activity back. If, on the other hand, inflation threatens to drop into negative territory and the ECB is afraid that this may stifle economic growth then they practice quantitative easing to increase the supply of money. Quantitative easing refers to the reduction of interest rates and controls and the printing of money, and that is one of the powers of a country: Countries have the capacity to print their own money. Bitcoin is fundamentally different to fiat money in that important respect.

I find it funny that people defend theft if done slowly enough.  At 2%, it takes the ECB 35 years to steal half of the savings in Europe.  At what point would you be upset?  25 years?  10?

[sana8410]

Price data is important as it indicates whether there's a period of inflation or deflation, a general trend in the price level;

[zolace]

Inflation is the general increase in prices, so it is the goods that you buy whose price will inflate, rather than the currency used to buy the goods.

[deisik]

Inflation is the general increase in prices, so it is the goods that you buy whose price will inflate, rather than the currency used to buy the goods.

Some people want to be different and say that inflation is an increase in money supply (monetary base before all). It may or may not influence the prices...

[ZephramC]

Inflation is the general increase in prices, so it is the goods that you buy whose price will inflate, rather than the currency used to buy the goods.

Some people want to be different and say that inflation is an increase in money supply (monetary base before all). It may or may not influence the prices...

Those are two possible definition of inflation. Monetary inflation and price inflation.

[deisik]

Inflation is the general increase in prices, so it is the goods that you buy whose price will inflate, rather than the currency used to buy the goods.

Some people want to be different and say that inflation is an increase in money supply (monetary base before all). It may or may not influence the prices...

Those are two possible definition of inflation. Monetary inflation and price inflation.

To avoid confusion, money supply (or its increase) is better to be used instead of monetary inflation since deflation (the opposite of price inflation) has only one meaning (namely, currency appreciation). There is no monetary deflation in the sense of money supply contraction...

[ZephramC]

Inflation is the general increase in prices, so it is the goods that you buy whose price will inflate, rather than the currency used to buy the goods.

Some people want to be different and say that inflation is an increase in money supply (monetary base before all). It may or may not influence the prices...

Those are two possible definition of inflation. Monetary inflation and price inflation.

To avoid confusion, money supply (or its increase) is better to be used instead of monetary inflation since deflation (the opposite of price inflation) has only one meaning (namely, currency appreciation). There is no monetary deflation in the sense of money supply contraction...

And that, that is a big mistake! 

[noviapriani]

 Imagine if bitcoin or more importantly dogecoin caught on... I have always believed that Indians, once they catch an idea run with it full steam. In a country like India doge or crypto can be an even greater benefit as it does away with infrastructure like banks or atms on every corner...

[boumalo]

Rising prices is not good but decreasing pricing is good; paying less for stuff is a good thing :

https://www.youtube.com/watch?v=uaOudcjEqgM

[deisik]

Inflation is the general increase in prices, so it is the goods that you buy whose price will inflate, rather than the currency used to buy the goods.

Some people want to be different and say that inflation is an increase in money supply (monetary base before all). It may or may not influence the prices...

Those are two possible definition of inflation. Monetary inflation and price inflation.

To avoid confusion, money supply (or its increase) is better to be used instead of monetary inflation since deflation (the opposite of price inflation) has only one meaning (namely, currency appreciation). There is no monetary deflation in the sense of money supply contraction...

And that, that is a big mistake! 

It is common in science that terms initially having multiple meanings (like inflation) ultimately sustain only one primary definition. To attach additional meanings can only lead to further confusion as we can see here when people using the same words actually imply very different concepts and ideas...

And I'm not even talking about people that don't consider economics as science... 

[sana8410]

Inflation is one of the most important variables in economics. And the Glossary of Economics Terms defines deflation as occurring “when prices are declining over time”.

[ZephramC]

Inflation is one of the most important variables in economics. And the Glossary of Economics Terms defines deflation as occurring “when prices are declining over time”.

So, in your opinion, what is the "right" term for decrease in monetary base (which can or might not lead to decline in prices)? Is "money supply contraction" right term? Is the Glossary of Economics Terms anyhow more authoritative than other sources?

[Monkey1]

Are we more interested in the impact of inflation/ deflation or the constant argument about the definition?

[deisik]

Are we more interested in the impact of inflation/ deflation or the constant argument about the definition?

I always suggest to use terms 'appreciating/depreciating currency' to avoid possible confrontation misunderstanding...

[madisona]

If everyone hoarded bitcoins.
Bitcoins will end up up up.