Is fractional reserve banking inflationary?

Apparently yes, because that statement doesn't seem to mean what I thought it meant, since now you seem to be giving a completely conflicting definition of inflation also.

When you say "inflation is always and everywhere a monetary", that to me seems to give the message that inflation is caused only by factors caused by money issues itself.
But then you said "prices going up across the board" is what inflation is.

That doesn't leave much room for factors not having to do with money issues causing prices to go up.
So obviously there is something about your statements I am not understanding.

Unless you are denying that something else could cause general prices across the board to rise that doesn't have to do with money issues (or a change to the money itself, to be more precise).

Is that all too complicated for you to understand?

You see, the problem with ambiguous statements is it leaves many possible meanings and many possibilities, to which the readers are left to guess.

 

Nothing else could cause the price of money to fall other than...hm, the price of money.

Inflation can't occur in an economy without money , which is proof that inflation is always and everywhere a monetary phenomenon.

 

Well then your statement was very misleading and pointless to say, wasn't it?


Prices can still rise for various reason that do not have to do with money changes. (Example: a small country highly reliant on foreign trade and then there is a sudden embargo)

I'm very frustrated because it still seems to me that you're beating around the bush, making statements that seem to me to have ambiguous meanings, and not being clear what you believe about any of this.

I'm done arguing with you. If we've gone back and forth this many times and I still don't have a good idea what you're saying, then it's a likely bet I still won't know what you're saying even after several more posts.
Not wasting my time and effort.

 

Misleading? I thought it was very precise and clear. Inflation is always and everywhere a monetary phenomenon.

 

What does that even mean?
You just basically said it was "monetary" because anything has to do with money.
(quote from you: "Inflation can't occur in an economy without money , which is proof that inflation is always and everywhere a monetary phenomenon.")

Which makes your statement COMPLETELY pointless in the context of this discussion.

Unless I'm STILL misunderstanding you, but in that case it's YOUR fault.

 

It means that inflation is a reduction in the price of money brought about by an increase in supply by the monetary authorities.

 

But isn't it true there are other factors in the economy that can cause prices to go up that doesn't have to do with the money?

For example, maybe rising population causes there to be a shortage of something, house prices could go up in all the major cities.

 

Give me an example of prices going up in a non-monetary economy

 

So that's the issue, I presume.

You do not believe, or are not familiar with, how other non-monetary factors can cause prices to go up.

 

Maybe you can explain how without money all prices can go up. I'm eager to learn.

 

Well, it's unlikely all prices of every single thing would all go up at the same time, but it's possible the prices of a good many things could go up.

Basically, if any major expense goes up in people's lives, that could increase the price of labor, and the prices of many other things are very dependent on the cost of labor, so they would go up to. The prices of many different things can be very interconnected in the economy.
If land prices go up, that sends up rents, can increase the cost of labor (at least in more populated centers of economic activity), and make business expenses higher too, raising the cost of things like buying a burger.

Or if a nation is highly dependent on importing something from another country, and something happens in that other country.
You might recall the Energy Crisis in the 70s, where the rising cost of oil on world markets started contributing to rising prices of almost everything else.

 

So...if today it requires three apples to exchange for one orange, what happens when it takes four apples. Has the general price level gone up?

 

I do not see what that has to do what we are talking about.

Yes the price would go up. Whether you consider that to be "inflation" depends on what your specific definition of inflation is.

 

The price of which would go up? The orange or the apple?

 

Yes, I see that was the point you were trying to make. You responded before I could finish editing my post.

I understand the point you are trying to get at here, but I still think that is besides the point (in a way).

But it is an important point, still, I agree.

Normally when we talk of "prices going up", when it doesn't have to do with monetary-caused inflation, we are talking about all the prices going up except for wage levels.
However, even with regular monetary-caused inflation, that can still send general prices rising faster than wage levels, so it can be hard to draw a difference between them.

 

So then all prices aren't going up. Some are going up and some are going down.

 

I think there is a lot of contention and argument about this point between different schools of economic thought.

Naturally, you have a point there. But most economists in general still recognize that prices (in general) in an economy can still go up, caused by other factors not directly tied to any change in money itself.

I don't know if you are familiar with the concepts of "cost-push inflation" and "wage price spiral", which basically postulates that workers will (to some extent) demand higher wages in response to rising prices, which in turn will drive general prices in the economy even higher.

 

So if I earn one bushel of wheat per day and then my wages go up to 1.5 bushels of wheat per day, has the general price level increased?

 

Not necessarily.
That would be true if the money was pure fiat currency, and had absolutely no intrinsic worth whatsoever other than as a means of trading exchange.

However, I have already explained in this thread why that is not completely true.

Like I explained before, if the country's currency was on the gold standard, backed by gold, you could increase the money supply without it causing inflation.

 

Inflation cannot occur in a non-monetary economy. Therefore, inflation is purely a monetary phenomenon.

 

Then that is what you mean when you say "inflation is purely a monetary phenomenon". You shouldn't separate that last statement from the first, otherwise it can be ambiguous and confusing.

To me it seemed to imply you were trying to say that inflation can only be caused by changes to money itself. (i.e. if more fiat money gets created, or if the backing of the money is reduced)
Which I now presume that is not what you were trying to say.

 

What's confusing? When the price of money falls, that's what we call inflation, because all other prices rise in relation. Without money, there could be no general rise in prices.

Always and everywhere a monetary phenomenon.

 

But sometimes the price of most everything else can increase when the price of money does not fall.
That is, the cause of the comparative change did not come from the money, if that makes sense.

Situations like that are what can result in some confusion.

 

If prices in general are going up then that means that the price of money is falling. They are inverses of each other.

 

Do you recognize that the relative price of things to money could be going up for a reason that has nothing to do with the money itself, in some situations?

In such a case, the question is whether we should consider that to be "inflation".

Or what about if the price of pretty much everything starts going up, except for wages? Should we consider that to be "inflation"?
Even though pure monetary causes all by themselves can have a little bit of this effect?