"Inflation is everywhere and always a monetary phenomenon" .- the actual price inflation

"Inflation is everywhere and always a monetary phenomenon" .- the actual price inflation

The mandate of the Federal Reserve choose pocket: the actual price inflation

Date:  November 2, 2018Author:  kenzocaspi0

"Inflation is everywhere and always a monetary phenomenon".-  Milton Friedman

This quote cited by the renowned American economist Milton Friedman suggests something important about inflation. What he means is that inflation is a function of money, but what does that mean exactly ?

To better appreciate this thought, let's use a simple example of three people stranded on a deserted island.

A person has two water bottles and is ready to sell one of the bottles to the highest bidder.  Of the two bidders desperate, one finds a solitary dollar bill in your pocket and is the highest bidder.  But just before the transaction is complete, the other person finds a twenty dollar bill buried in his backpack. Suddenly, the water bottle that was about to be sold for a dollar now sells for twenty dollars.  Nothing in the water bottle changed. What changed was the money available between the people of the island .

Most people think that inflation is caused by rising prices.  But the rise in prices is only a symptom of inflation.  As illustrated by the example of a deserted island, inflation is caused by too much money in the economy in relation to goods and services.  What we experience is that goods and services rise in price, but inflation is actually the value of our money down.

What it means to live in the world of post - 1933 Federal Reserve to call "price stability"?  It means that we must work harder to keep our wages and wealth rising faster than inflation.Means that two incomes where one used to be enough required. Both parents work, leaving children home alone, and investments must be more risky in an effort to preserve our wealth and stay ahead of the inflation rate. Somehow, the intellectual elite in charge of implementing these policies has convinced us that this is right and good. The reality is that impose levels of increasingly higher prices has serious consequences and is a highly destructive policy.  

 The money supply is continually expanding and periods of falling prices that compensate for periods of rising prices disappear completely. Prices continue to rise.

Here you should make an important distinction, and this helps explain why inflation is sustained so important to the Fed and the government.  That's why inflation has been undertaken as a deliberate act of policy.  As mentioned, periods of falling prices are not necessarily periods of deflation.  The price drop may be the result of technological advances and increased productivity.Alternatively, the price drop can result from an accumulation of unproductive debt and eventual inability to pay the debt. That is the correct definition of deflation. This occurs as a symptom of excessive accumulation of debt and a speculative boom that leads to excess inventory endless. This is followed by an excess of goods and services in the market and falling prices.

In addition, there are periods of hidden inflation. This occurs when the levels observed prices increase, but only because of policies that intentionally expanded the money supply.  In other words, healthy improvements in technology and productivity that should have provoked a healthy and desirable decline in prices or the cost of living you are denied by an easy monetary policy that acts against the natural movements of prices .  By keeping your foot on the monetary accelerator and use so shortsighted low inflation readings as justification, the Federal Reserve allows a transfer of sinister and criminal wealth.

This transfer of wealth to the economy condemns deadly fumes can not smell or see or feel. In addition, there are periods of hidden inflation.This occurs when the levels observed prices increase, but only because of policies that intentionally expanded the money supply.  In other words, healthy improvements in technology and productivity that should have provoked a healthy and desirable decline in prices or the cost of living you are denied by an easy monetary policy that acts against the natural movements of prices .  By keeping your foot on the monetary accelerator and use so shortsighted low inflation readings as justification, the Federal Reserve allows a transfer of sinister and criminal wealth.

This transfer of wealth to the economy condemns deadly fumes can not smell or see or feel.

the point at which the different parts of the population are affected by rising prices. Controlled under our Federal Reserve monetary system, new money enters the economy through the banking and financial system. The first of those with access to new money. - The government, large corporations and wealthy households. -  can reverse it before the uneven effects of inflation have been filtered through the economic system. The transfer of wealth occurs between late silently recipients of new money (losers) and the early recipients thereof (winners).     Despite being an advocate of inflationary policies as a means to combat depression, John Maynard Keynes rightly observed that "the continuing process of inflation, government can confiscate, secretly and unobserved, an important part of wealth of its citizens. "

Unfortunately, wealth accumulates only when it grows faster than inflation. In our modern society continually compare ourselves with those around us in social networks, we become obsessed with what they do the S & P 500 or the Dow Jones daily, but do not understand that wealth should be measured in a real way - net of inflation. For more information on this concept,

Economists mainstream either unable to decipher this process of confiscation or intentional complicity in their rationalization, have convinced an intellectually lazy that a certain degree of price rise is "optimal" and normal population.People who buy this jargon are being cheated of their wealth.

Keep elected and unelected officials responsible for a clear and accurate measurement of inflation is the only way to discover the truth about the effects of inflation

On that simple and clear basis, we should discard the empty counterfactual used as the main argument behind inflation targets and most other situations of fiscal and monetary policy. Policy and the inflation process are both toxic and evil time.

Copyright © misteri1963 All rights reserved.You can copy and distribute this article as long as you do not modify it in any way, the content remains complete, credit is given to the author and this URL is included https://misteri1963.blogspot.com and the Copyright Notice