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Author Topic: Inflation and Deflation of Price and Money Supply  (Read 505569 times)
DannyElfman
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July 10, 2014, 10:10:09 PM
 #281

Since we're both very excited about this, and to restrain our words from moving too far from the point, I think we should address one issue at a time.

I will start with a definition of inflation that I agree with:

in·fla·tion  
Noun
  • The action of inflating something or the condition of being inflated (This is the definition not related to economics)
  • A general increase in prices and fall in the purchasing value of money (This definition is related to economics)

My interpretation from the above definition related to economics:

1. Price Inflation refers to the "general increase in prices" part of that definition
2. Money Supply Inflation refers to the "fall in the purchasing value of money" part of that definition

Therefore, I can not agree that inflation "means the same thing as increase", as it conflicts with the "fall in the purchasing value of money" part of that definition.

Note: this is not an argument of what the "general increase in prices" or "fall in the purchasing value of money" means. We can get to that once your interpretation of the word inflation is understood.
1 and 2 are really just two different ways of looking at it. When prices generally rise the $100 that you have in your wallet can now buy less goods.

This spot for rent.
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July 11, 2014, 01:39:06 PM
 #282

One thing that has not been accounted for in the OP is advancement in tech and services.

If a coin has x value due to its supply / demand. I guess the tech and services are just a general supply concern.

The more advances in technology, the more demand.

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alain77
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July 12, 2014, 09:53:58 AM
 #283

Vous aviez besoin d'un prêt d'argent de toute urgence, et sans payer

aucun frais à l'avance ( comme frais de dossier,de notaire , etc )

Vous êtes à la bonne adresse ...

Nous offrons des prêts allant de 5.000€ à 500.000€ avec un taux de 3%à toute personne majeure et de bonne moralité

NB: Nous ne percevons aucun frais à l'avance avant de vous octroyer votre prêt ...

Offre uniquement réservée aux personnes majeures et capables de rembourser

Me contactez par mail:alain.lapreuvote@laposte.net
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July 14, 2014, 01:34:01 AM
 #284

interesting!

eboard10
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July 22, 2014, 02:16:38 PM
 #285

Guys, I found a great article that clearly explains the relationship between money supply and demand for liquidity and how that affects asset prices. He basically shows how QE hasn't had much of an effect on inflation so far due to the low demand for credit since banks weren't willing to lend to anyone. He also proposes the idea that the current change in market sentiment coupled with excess liquidity in the market will lead to stock price inflation over the next year or two.

http://seekingalpha.com/article/2309905-qe-to-propel-market-treacherously-higher-after-taper-ends

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July 24, 2014, 02:23:30 PM
 #286

Here is a description of the Argentina situation that shows that the inflation in prices is not directly computable from the inflation in money supply:

"Second, simple money-supply expansion to fund public expenses is a well-known alternative, and Mercedes Marcó del Pont, when in charge of the Central Bank, did use this tool to finance government. However, this ploy expanded the monetary base at a rapid clip, with a peak in February of last year. The annual expansion of almost 40 percent and its inflationary implications became too great. Monetary expansion has continued, but at a slower rate.

At present, the expansion hovers around an annual 20 percent. Despite the lessened monetary expansion, however, inflation remains high, and is vulnerable to decreased demand for the Argentinean peso. So this too limits the room for funding through what is known locally known as la maquinita — the little inorganic printing machine. Any surge in monetary expansion would cause inflation to surge beyond the current level, which is approximately 40 percent."

From (the recommended) Panam Post:

http://panampost.com/ivan-cachanosky/2014/07/24/argentina-central-bank-on-path-to-insolvency-in-just-two-months/

painlord2k
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July 24, 2014, 06:04:03 PM
 #287

What is happening in Argentina is a movement from inflation to hyperinflation.
People now believe inflation is ingrained in the currency and it is a continuous policy of the government, so they are freeing themselves from Argentinian Pesos whatever be the actual currency supply expansion.

Specific good/service prices increase can not be foretell from currency inflation because the Central Bank and the government can not control or foresee exactly where the new money will flow after they give it away.
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July 24, 2014, 07:51:29 PM
 #288

What is happening in Argentina is a movement from inflation to hyperinflation.
People now believe inflation is ingrained in the currency and it is a continuous policy of the government, so they are freeing themselves from Argentinian Pesos whatever be the actual currency supply expansion.

Specific good/service prices increase can not be foretell from currency inflation because the Central Bank and the government can not control or foresee exactly where the new money will flow after they give it away.

Exactly, that is how the hyperinflation is ignited, when everyone tries to get rid of the coins as fast as possible.

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July 26, 2014, 04:45:26 PM
 #289

Guys, I found a great article that clearly explains the relationship between money supply and demand for liquidity and how that affects asset prices. He basically shows how QE hasn't had much of an effect on inflation so far due to the low demand for credit since banks weren't willing to lend to anyone. He also proposes the idea that the current change in market sentiment coupled with excess liquidity in the market will lead to stock price inflation over the next year or two.

http://seekingalpha.com/article/2309905-qe-to-propel-market-treacherously-higher-after-taper-ends

Banks are always willing to lend since lending is their bread (and butter). The problem with banks is that those who can pay back and return debts no longer want to live on credit. From the outside it looks as if banks were unwilling to loan, but this is utterly misleading.
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July 26, 2014, 06:56:22 PM
 #290

Brazil "freeing up" USD 20B by changing reserve requirements for banks. Too few loans defaulted appearantly. This will not spur price inflation! If inflation soars anyway, someone else is to blame, greedy merchants perhaps.

http://www.buenosairesherald.com/article/165525/brazil-central-bank-moves-to-increase-credit-supply

painlord2k
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July 26, 2014, 09:49:56 PM
 #291

If inflation soars anyway, ......

No one could have imagined it.
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July 27, 2014, 09:06:03 AM
 #292

What is happening in Argentina is a movement from inflation to hyperinflation.
People now believe inflation is ingrained in the currency and it is a continuous policy of the government, so they are freeing themselves from Argentinian Pesos whatever be the actual currency supply expansion.

Specific good/service prices increase can not be foretell from currency inflation because the Central Bank and the government can not control or foresee exactly where the new money will flow after they give it away.

Exactly, that is how the hyperinflation is ignited, when everyone tries to get rid of the coins as fast as possible.


When the government is lying and printing like there is no tomorrow, people expect a lot of inflation which fuels inflation

Precious metals and Bitcoin are a good edge against inflation if you manage to protect it from those who want to steal it..

Barrett12
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July 29, 2014, 04:31:37 AM
 #293

Woh..it was such a great post. People like me can learn so many things. Everything is described properly here. You must have deep knowledge about the subject. 
boumalo
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August 03, 2014, 10:55:53 PM
 #294

Woh..it was such a great post. People like me can learn so many things. Everything is described properly here. You must have deep knowledge about the subject. 

It is sometimes hard to read all the posts but congratulations to you if you did

Inflation is probably 5-10%/year in the US at the moment and heading higher, protect yourself and your family!

right wing authoritarian
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August 04, 2014, 07:36:56 AM
 #295

Woh..it was such a great post. People like me can learn so many things. Everything is described properly here. You must have deep knowledge about the subject. 

It is sometimes hard to read all the posts but congratulations to you if you did

Inflation is probably 5-10%/year in the US at the moment and heading higher, protect yourself and your family!

Current US inflation is approximately 2.1%
tee-rex
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August 04, 2014, 03:13:16 PM
 #296

What is happening in Argentina is a movement from inflation to hyperinflation.
People now believe inflation is ingrained in the currency and it is a continuous policy of the government, so they are freeing themselves from Argentinian Pesos whatever be the actual currency supply expansion.

Specific good/service prices increase can not be foretell from currency inflation because the Central Bank and the government can not control or foresee exactly where the new money will flow after they give it away.

Exactly, that is how the hyperinflation is ignited, when everyone tries to get rid of the coins as fast as possible.


When the government is lying and printing like there is no tomorrow, people expect a lot of inflation which fuels inflation

Precious metals and Bitcoin are a good edge against inflation if you manage to protect it from those who want to steal it..

And if you drop dollars (or whatever currency for that matter) and begin transacting in bitcoins, you add fuel to dollar inflation thereby.
Possum577
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August 04, 2014, 08:31:28 PM
 #297

Vous aviez besoin d'un prêt d'argent de toute urgence, et sans payer

aucun frais à l'avance ( comme frais de dossier,de notaire , etc )

Vous êtes à la bonne adresse ...

Nous offrons des prêts allant de 5.000€ à 500.000€ avec un taux de 3%à toute personne majeure et de bonne moralité

NB: Nous ne percevons aucun frais à l'avance avant de vous octroyer votre prêt ...

Offre uniquement réservée aux personnes majeures et capables de rembourser

Me contactez par mail:alain.lapreuvote@laposte.net


When it's explained to me in French it does make a bit more sense to me. Which isn't saying much for ME!

Too bad there isn't a translate function on this forum...

painlord2k
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August 05, 2014, 07:08:53 PM
 #298

Woh..it was such a great post. People like me can learn so many things. Everything is described properly here. You must have deep knowledge about the subject. 

It is sometimes hard to read all the posts but congratulations to you if you did

Inflation is probably 5-10%/year in the US at the moment and heading higher, protect yourself and your family!

Current US inflation is approximately 2.1%

This is the CPI or some other Index capturing the increase of prices.
These indexes are constantly "revised" to keep the numbers low.
When the CPI do not include food, fuel and housing, what is useful for?
Propaganda?
wealthy$
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August 08, 2014, 12:03:44 PM
 #299

it either you get rich or die trying Grin

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August 10, 2014, 06:23:57 PM
 #300

Can anybody explain to me why, in an environment in which BTC is expected to appreciate further, anybody would use their BTC to spend?


For example, if I have 10 BTC, I can use that to buy something worth $5,000 today (just making numbers up). However, if I wait until it goes up, I can use my 10 BTC to buy something worth $10,000 a month from now.

Because I'm expecting the value of my holdings to appreciate rather rapidly, as many in the BTC community are, a rational person would hold rather than spend their BTC.

However, if everybody is under the assumption that BTC is still undervalued, everybody will hold their BTC in anticipation of further appreciation.

But because the value of a BTC depends on how many people are using BTC each day, and how large their spending is, nobody will be spending BTC. This will either cause the BTC ecosystem to collapse (if their was an economy that only used BTC), or the value of BTC to collapse.

I'm sure it has been addressed, but I skimmed through this thread and didn't see much. Thanks again for the help.
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