One of the hardest concepts for Principles students, politicians and pundits, oh heck, just about everyone to fully grasp is inflation. A big part of the reason is because inflation is an abstract concept that is not directly measurable. We can conceive of it, but we can't measure it. I'm no physicist (and open to … Continue reading Yes, Inflation/Deflation is Hard to Measure
deflation
Inflation vs. The Cost of Living
We are now seeing a disconnect between how the public and policymakers/central banks perceive what each calls "inflation". The public at large, encouraged by talk from the hard-money gold crowd, are encouraged to see "inflation" whenever certain key prices go up. Recently we've seen gasoline and food prices go up, and along with these price increases more … Continue reading Inflation vs. The Cost of Living
CPI: Deflation Watch
The September Consumer Price Index numbers are out. Inflation is really a sustained general increase in the level of all prices. Since the price index itself can be rather noisy, varying a lot from month-to-month, many economists use some different techniques to smooth out the trend to see what the "sustained" action really is. Three … Continue reading CPI: Deflation Watch
Hamilton Explains Why Deflation Is Bad
James Hamilton at Econbrowser explains why deflation is bad:. It is also quite clear to me that deflation-- an increase in the number of goods you can buy with an individual dollar-- can be even more destructive. Since this may be less obvious to many readers, let me review some of the reasons why I … Continue reading Hamilton Explains Why Deflation Is Bad
Smells Like Deflation
Oh, buried in the press release on 2nd Qtr 2010 GDP estimates is this item: The price index for gross domestic purchases, which measures prices paid by U.S. residents, increased 0.1 percent in the second quarter, the same increase as in the advance estimate; this index increased 2.1 percent in the first quarter. Excluding food … Continue reading Smells Like Deflation
CPI and Velocity of Money data for January indicate deflation worry
From Angry Bear: Beginning of the year economic blues in the US? I think so. Just looking over Spencer's CPI post; here is an excerpt (the first paragraph): The CPI report was encouraging. The total CPI rose 0.2% and the year over year increase is only 2.6%. Although real average hourly earnings fell, real weekly … Continue reading CPI and Velocity of Money data for January indicate deflation worry
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