Inflation and Deflation of Price and Money Supply

[STT]

Some people in that scenario would send 8 dollars home to the country where beer is 1 dollar.   While they work they might make their own beer or just not drink any beer till they can return home again.     The currencies should be competing for value but in our current system alot is biased due to politics I think, part of the Trump rhetoric is the struggle with this kind of multi national competition and his idea of regaining an advantage for workers.   Im not saying he is right but thats how he got into power, people dont like this current currency system and feel poorer in favour of someone elses politics.

Money and money supply (quantity of money) change prices (inflation/deflation) but does not change anything in real life.

This I disagree with.  A system of circulating value, its very important where new money supply is.   Our western currency system now allows government to supply itself money and attribute value outside of capitalism.   This is inflation and deprecation of workers capital, capitalism is money and power of production with the people.  The west no longer has a capitalist system with integrity, it has bias and political advantage by some.  China favours such a system as they are not an equal nation in work (they are not communist) and capital attributed but I imagine they would rather have more control of power within their nation rather then go via dollars and bargain with foreign powers

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[dontworry]

@STT

Real price change occurs when money is not involved.

I will explain with an axample:

Assume;
1 beer = 1 apple = 1 hr work = 1 orange = 1 bread.  

If quantity of beer increased by 100%  in the market, real inflation occurs like this:
2 beer = 1 apple = 1 hr work = 1 orange = 1 bread

When money involved price change does not affect anything.

Assume;
$1 = 1 beer = 1 apple = 1 hr work = 1 orange = 1 bread

If quantity of $ increased by 100%  in the market, real inflation occurs like this:
$2 = 1 beer = 1 apple = 1 hr work = 1 orange = 1 bread

Since $ is not a real thing, real life didn't change by quantity of $.
Money when used as a means of exchange is just a virtual tool. Therefore if you price everything in money (as it's done everywhere for simplicity)  your pricing system, inflation, deflation are imaginary.

[deisik]

Since $ is not a real thing, real life didn't change by quantity of $.
Money when used as a means of exchange is just a virtual tool. Therefore if you price everything in money (as it's done everywhere for simplicity)  your pricing system, inflation, deflation are imaginary

Are you Imnotback in disguise (or whatever alt this dude has been recently using)?

The problem with this logic is that in real life things don't happen along the lines you just outlined. In real life the price changes (like 1 beer was 1$ and then 1 beer drops twice in price) don't happen simultaneously in every part of the economy. It takes time to propagate through it (even speed of light had a finite value), and those who are using the same dollar but at different moments are using different dollar and, strictly speaking, not on equal terms. In this manner, the effects of both inflation and deflation are real, so you can't possibly claim that either is imaginary

[dontworry]

Since $ is not a real thing, real life didn't change by quantity of $.
Money when used as a means of exchange is just a virtual tool. Therefore if you price everything in money (as it's done everywhere for simplicity)  your pricing system, inflation, deflation are imaginary

Are you Imnotback in disguise (or whatever alt this dude has been recently using)?

The problem with this logic is that in real life things don't happen along the lines you just outlined. In real life the price changes (like 1 beer was 1$ and then 1 beer drops twice in price) don't happen simultaneously in every part of the economy. It takes time to propagate through it (even speed of light had a finite value), and those who are using the same dollar but at different moments are using different dollar and, strictly speaking, not on equal terms. In this manner, the effects of both inflation and deflation are real, so you can't possibly claim that either is imaginary

What's Imnotback? Is it a forum user? Sorry English is not my first language, couldn't get what you meant by Imnotback. If it's a forum user, no, this is my first and only one forum account in this forum. I don't know how can I assure you on this reality. But this is true. I am a completely new person in this forum.
Whatever am I using is my business. But I have never consumed drugs and will never do, if this is what you mean.

Yes it takes time to propagate. But in the short term (less than 1 year) market prices will definitely come to an equilibrium point where the monetary inflation/deflation has no effect in real life, real sectors. For sure, inflation/deflation creates a wave in the prices and affect financial sector profitability as they borrow-lend money based on the value of money. Apart from entities who do business in finance, who lend-borrow money, who hold financial assets, the effect is minimal, can be neglected.

However, real inflation affects everyone. For instance, quantity of oil affects oil prices. Oil is a real good, not virtual like money. Oil prices affect everyone, quantity of foods, cars, houses and all the other real-physical things create permanent and real life results.

[deisik]

Since $ is not a real thing, real life didn't change by quantity of $.
Money when used as a means of exchange is just a virtual tool. Therefore if you price everything in money (as it's done everywhere for simplicity)  your pricing system, inflation, deflation are imaginary

Are you Imnotback in disguise (or whatever alt this dude has been recently using)?

The problem with this logic is that in real life things don't happen along the lines you just outlined. In real life the price changes (like 1 beer was 1$ and then 1 beer drops twice in price) don't happen simultaneously in every part of the economy. It takes time to propagate through it (even speed of light had a finite value), and those who are using the same dollar but at different moments are using different dollar and, strictly speaking, not on equal terms. In this manner, the effects of both inflation and deflation are real, so you can't possibly claim that either is imaginary

What's Imnotback? Is it a forum user? Sorry English is not my first language, couldn't get what you meant by Imnotback. If it's a forum user, no, this is my first and only one forum account in this forum. I don't know how can I assure you on this reality. But this is true. I am a completely new person in this forum.
Whatever am I using is my business. But I have never consumed drugs and will never do, if this is what you mean

Then forget about it

Yes it takes time to propagate. But in the short term (less than 1 year) market prices will definitely come to an equilibrium point where the monetary inflation/deflation has no effect in real life, real sectors. For sure, inflation/deflation creates a wave in the prices and affect financial sector profitability as they borrow-lend money based on the value of money. Apart from entities who do business in finance, who lend-borrow money, who hold financial assets, the effect is minimal, can be neglected.

However, real inflation affects everyone. For instance, quantity of oil affects oil prices. Oil is a real good, not virtual like money. Oil prices affect everyone, quantity of foods, cars, houses and all the other real-physical things create permanent and real life results

I understand what you meant to say (namely, that prices will ultimately rebalance according to the amount of money in circulation and quantity of goods in the economy), but you can't possibly say that inflation as well as deflation are imaginary. Obviously, their effects on the economy and lives of people are real and cannot be neglected. But even if you discard these effects entirely and consider the issue purely theoretical, you still can't just take and throw away the speed with which rebalancing is going to happen

Otherwise, it will be oversimplification

[dontworry]

I understand what you meant to say (namely, that prices will ultimately rebalance according to the amount of money in circulation and quantity of goods in the economy), but you can't possibly say that inflation as well as deflation are imaginary. Obviously, their effects on the economy and lives of people are real and cannot be neglected. But even if you discard these effects entirely and consider the issue purely theoretical, you still can't just take and throw away the speed with which rebalancing is going to happen

Otherwise, it will be oversimplification

You are referring to chronic inflation/deflation which lasts for longer than 5 years. I agree. Ongoing chronic inflation has real effects on purchasing power of fixed incomes. Fixed incomes/expenditures slowly adapt to rapidly raising overall prices. If possible it's better not to be in the fixed income side in a chronic high inflation economy.

Why does it happen? Sometimes governments use inflation as another form of tax. They might enjoy earning more tax and may not be willing to solve it in favor of fixed income people. Then chronic inflation occurs. In my opinion, inflation/deflation is mostly a political choice of governments rather than an economic cause and effect.  Sometimes politicians target high growth and less unemployment to win next election. Artificially accelerated growth with insufficient resources eventually ends up with accelerated debt burden. Injection more cash into economy to sustain growth by state expenses/investments ends up with higher inflation and higher debt burden. Then governments try to look like very busy with fighting with inflation and curing deficits as if they have no role in the result. Governments fully know, aware of and control everything in economy.

In fact inflation/deflation is purely theoretical, scientific and simple thing. When inflation is used as a political choice it's advertised as if it's very complicated and difficult to solve. Politicians usually tell voters what voters want to hear. If voters want conflicting things that is impossible to achieve, it's a bit understandable how politicians react to such unbalanced requests. If voters want more jobs, the solution is simple: higher growth. But unnatural-artificial growth will bring many side effects. İnflation is just one of those side effects. Natural growth is possible by better qualified workforce. Better qualification needs better education and more time. In most countries elections repeat in every 4-5 years. You can't improve workforce qualification in less than 20 years if you start today, therefore you can't solve unemployment in a couple of years. You can do it in short term artificially with side effects, one of them is inflation, another one is higher interests which blocks growth in long term, another one is instability for debt burden-deficits. Even if unemployment is reduced today, it will be temporary solution unless qualification level of workforce is improved by providing more quality education to everyone.

Inflation is usually related to unemployment and it's related to workforce qualification and it's related to education quality. This direction is the way to natural growth. If you don't start from improving education quality, inflation shows up again and again.

[Lilmon]

I really think at this current rate bitcoin is producing over capacity output which also makes the demand for it lower. I think the value of it will start to slowly depreciate

[megynacuna]

I really think at this current rate bitcoin is producing over capacity output which also makes the demand for it lower. I think the value of it will start to slowly depreciate

In theory you are right but the price started appreciating the very day you made this post and that makes it practically impossible and cast doubt if it's indeed producing over capacity output or there's something else.

[Lilmon]

As the american dollar's value is increasing i think btc will decrease as both cannot go up, one currency's appreciation in most cases causes depreciation to the other coin. Aside from that Btc's supply is limited which makes the demand for it higher. Since the demand is higher the value of the coin will eventually  (long term) go up. But currently I think it will slowly depreciate as we're in inflation

[IamMachine]

I really think at this current rate bitcoin is producing over capacity output which also makes the demand for it lower. I think the value of it will start to slowly depreciate

Bitcoin is an electronic currency which is not provided neither goods nor gold. Its value is governed solely by demand. As soon as she received the demand in China the price has gone up if the demand in China will drop and bitcoin will fall, too.

[bitcoinvest]

did you read the news that Europe is thinking take out the paper money in the next years? any thoughts on that?

[StefanReed]

did you read the news that Europe is thinking take out the paper money in the next years? any thoughts on that?

As far as I remember the news was that they wanted to move to plastic banknotes. This idea was about the dollar. To increase the service life of banknotes. And plastic the pounds I already have. In any case, in the future, all the force will be transferred to the payment card. It is connected with the fight against corruption and tax evasion.

[Pettuh4]

Bitcoin is very volatile and the market movements are faster compared to fiats.

Exactly why the prices aren't stable but keeps fluctuating thereby creating artificial inflation and deflation.

[deisik]

did you read the news that Europe is thinking take out the paper money in the next years? any thoughts on that?

As far as I remember the news was that they wanted to move to plastic banknotes. This idea was about the dollar. To increase the service life of banknotes. And plastic the pounds I already have. In any case, in the future, all the force will be transferred to the payment card. It is connected with the fight against corruption and tax evasion

I don't think the main reason is to extend the service life of physical money

Really, the life of a typical payment card is in most cases limited to just a few years (2-3 years on average). Personally, I had and have a lot of such cards, and only one of them has a 5 year lifetime. After expiration, they are useless and can be thrown away. I guess good cotton bills are more "durable" in this respect. As to me, the main reasons which explain moving from paper money are gaining more control over finances of the population and likely preventing counterfeiting. Counterfeiters are not just some rogue individuals, whole governments can counterfeit other governments' money. Apparently, in the latter case the counterfeit money will be virtually indistinguishable from the genuine money

[Gerlysheyn]

The basic answer is that it depends on factors such as the velocity of circulation (number of times money changes hands), the state of the economy and the growth in productive capacity (the Long Run Aggregate Supply LRAS).

[ekaterina77]

The basic answer is that it depends on factors such as the velocity of circulation (number of times money changes hands), the state of the economy and the growth in productive capacity (the Long Run Aggregate Supply LRAS).

I am very close to inflation. In my country recently, how many have not added a salary, everything is being eaten up by inflation. And the level of the national currency in general has become so cheap that it has fallen three times recently.

[kidsuzudn]

anyone can give a predict about the price of bitcoin? going up or down?

[posternat]

anyone can give a predict about the price of bitcoin? going up or down?

It is hard to predict the chart of bitcoin, since we have a fluctuated price of it.
Determining the price will be difficult to figure out.

[BitcoinPC]

Bitcoin is very volatile and the market movements are faster compared to fiats.

Yes, bitcoin is totally fluctuate so fast unlike to dollar.
This is why we love bitcoin, the fast movement of its value. We need do not need to worry increasing will be more this year for sure. The upwards trend of bitcoin always seems to be good sign for bitcoin.

[apuestascoin]

Bitcoin is very volatile and the market movements are faster compared to fiats.

Yes, bitcoin is totally fluctuate so fast unlike to dollar.
This is why we love bitcoin, the fast movement of its value. We need do not need to worry increasing will be more this year for sure. The upwards trend of bitcoin always seems to be good sign for bitcoin.

Agree , this consolidation of 1000$ , strong position , to keeping up tendence