Talk:Monetary inflation
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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."
Mervyn King:"Over the 30 year horizon 1968-98, the correlation coefficient between the growth rates of both narrow and broad money, on the one hand, and inflation, on the other, was 0.99." —Preceding unsigned comment added by 213.229.171.25 (talk) 12:43, 26 February 2008 (UTC)
Calling it a monetary phenomenon is an euphemism, a roundabout way of recognizing the monetary authorities' responsability for inflation. In a central bank-cartelised fractional reserve banking system, inflation is always the central banker's fault. --89.128.216.95 14:16, 29 June 2007 (UTC)
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[edit] Austrian
Actually the Austrian school does not believe that monetary inflation causes inflation, it believes that increase in the money supply is inflation. Money and Inflation
Milton Friedman, in "Money Mischief: Episodes in Monetary History", argues for a bimetallic standard on the grounds that the supply of two different metals is more stable than any single metal. A currency's stability is directly related to its monetary role as a "store of value"[1]. In an interview with Russ Roberts, Friedman has the following to say on monetary systems:
But that's why what you want—if possible—is a mechanical system. If there was any virtue to the gold standard, it was that virtue. Maybe you could create the same thing now. My favorite proposal really is a little bit more sophisticated—or less sophisticated if you want to look at it that way—than a straight increase in the quantity of money. I would—if I had my choice—freeze the amount of high-powered money. Not increase it.[2]
As the leading 20th century proponent of the Chicago School of Economics, Friedman et. al. were "intellectual heirs of the Austrian school of economics".
On these grounds I believe the last line under the heading "Monetary Inflation", which reads "while Austrian economics often calls for an end to fractional reserve banking and a return to some kind of gold standard." should be amended.
I don't agree at all. There is a great rift between Chicago and Vienna on the issue of commodity currencies. Friedman argues for any mechanism which ensures slow monetary growth, in "Capitalism and Freedom" he even mentions a computer program or a mathematical rule. But he is always talking of a centrally planned, centrally controlled money supply. Austrians talk of commodity currency not only to stem inflation, but also to take monetary policy out of the hands of governments. Rothbard was a great proponent of Free Banking, while Mises was more for the old gold standard, but both considered a virtue of gold that it tied the hands of central banks or directly made them irrelevant.
FMS
—Preceding unsigned comment added by 89.128.216.95 (talk) 23:29, 25 January 2008 (UTC)
[edit] Can someone re-write this in English, using correct mathematical punctuation?
M.V = P.T M = Money Supply V = Velocity of Circulation P = Price level T = Transactions or Output As Monetarists assume that V and T are fixed
[edit] Monetary inflation vs Inflation
Define inflation as rising prices and you’ll think that oil sheiks, credit cards and private businesses are the culprits and price controls are the answer. Define inflation in the classic fashion as an increase in the supply of money, with rising prices as a consequence, and you then have to ask the revealing question, "Who increases the money supply?" Only one entity can do that legally; all others are called "counterfeiters" and go to jail.
Nobel laureate Milton Friedman argued indisputably that inflation is always and everywhere a monetary matter. Rising prices no more cause inflation than wet streets cause rain. --213.229.171.25 (talk) 07:32, 4 March 2008 (UTC) inf
[edit] Politicization of the Term "Inflation"
Since central banks, or government treasury departments, directly cause inflation by debasing the national currency, these institutions have a vested political interest in redefining the term "inflation" as a rise in prices.
The reason the use of the word "inflation" has changed to mean "increasing prices" over the past 50-70 years is that Keynesian economics has been taught in universities around the world during the same time period. Keynes advocated creating economy growth by governments spending money they don't have. It is natural that the institutions that follow Keynesian policy have an incentive to blame inflation on something besides government policy. Thus the government defines inflation as an increase in the Consumer Price Index, instead of the increase of the money supply. The Consumer Price Index itself has been weighted to reduce the importance of food and fuel - the very sectors of the economy where the effects of inflation are always the most obvious.Cadwallader (talk) 21:08, 29 April 2008 (UTC)
