We're talking about inflation. Inflation is always a monetary phenomenon. Inflation is the rise in prices of other goods relative to a fall in the price of money.
Her remarks come in the second speech in as many days setting out her policy views. On Wednesday Ms Yellen defended the need for tighter monetary policy by saying that waiting too long to begin moving towards the neutral rate of interest risked a “nasty surprise” down the road — in the form of too much inflation or financial instability.
Hm, well there have been several posts in this thread offering different definitions/explanations of inflation relating to production and consumption. But if we agree that inflation is a monetary phenomenon resulting from a decrease in the price of money, we're off to a good start.
But seriously the point is that inflation is always and everywhere a monetary phenomenon. It cannot occur in a barter economy. Inflation/deflation used to (accurately) refer to an increase/decrease in the money supply. The effect of this was across-the-board prices, due to a change in the price of the monetary unit. Eventually, stupid people mistook the effect for the cause, and they began to refer to rising prices as inflation. There's really no good reason for a government to inflate its money, unless its intention is to manipulate the price of the monetary unit to its (or its cronies' advantage). There is no adverse effects of a stable price for money, but there are several adverse effects of a volatile price of money. Money is, after all, supposed to be a stable unit of account.
Yellen's use of "neutral" is meaningless and applies only to the way the Fed does things. It's hardly "neutral" when it comes to control of the money supply and still serves the purpose of allowing politicians to spend far more than they take in tax revenue.
What fascinates me about the left and right authoritarian parties in America is not so much their differences, but their similarities. Their belief in and misunderstanding of The Fed is one of those similarities.The reason, as you plainly stated here, is obvious: the allowing of deficit spending by their politicians in order to sate their special interests, allow their lavish lifestyles and temperately sate their unquenchable thirst for power all up until the country implodes.
Of course. Your posts have plainly demonstrated this. The economic definition even states that currency is a requirement: Thus, if you remove currency from the equation, inflation can not occur.
Fortunately for them, they have a governemnt-run public school system which will teach you just how wonderful the Fed is and how benevolent are the politicians for establishing a central bank.
please don't be silly. Europe has not imploded and neither has China so there is no danger the US will Also, Republicans are for single mandate at Fed, balanced budgets, and tax cuts. It will happen the second there is enough support for it, but not a second before. Do you understand?
Historically, inflation meant an increase in the money supply, deflation was a decrease in the money supply. As the money supply increased, prices increased due to the decrease in purchasing power of each $1 (and vice versa for deflation). The money supply increased and decreased due to many factors (not just printing money). Any textbook older than 20 years will give you that definition. With the dumbing down of Americans, "inflation" has been reduced to mean an increase in prices. I guess its too much for stupid Americans to learn the full cause and effect. https://inflationdata.com/articles/2010/07/21/real-definition-inflation/
wrong of course, that is any idea grudgingly accepted by some starting in about 1950 and by most now, but not historically!!
nice try at changing the subject. you were going to teach us the precise definition of inflation but oddly forgot all about it. I wonder why??
Wrong. Read Keynes 1913 paper, "Indian Currency and Finance". Or Keynes "Economic Consequences of the Peace" (1919). Inflation is an increase in the money supply, which along with other factors can result in increased prices. You do know who Keynes is, don't you? In fact, Keynes believed that prices did not significantly rise due to an increase in the money supply until there was full employment. So there is another link in the money supply to price increase chain - God forbid dumbed down Americans understand something with 2 links.