Comments on: Mises: Inflation and Deflation Are Meaningless Concepts

By: John James

John James — Fri, 02 Dec 2011 13:10:21 +0000

For anyone interested, this blog entry appears to be a direct response to another only days earlier... Inflation and Deflation: Austrian Definitions

By: StokeyBob

StokeyBob — Sun, 27 Nov 2011 04:11:10 +0000

No matter how much real money people can put together to build their countries the way they want there are those that can print up what ever it takes to get their way.

Maybe this will help make the danger of fiat money clear. Imagine you and me are setting across from each other. We create enough money to represent all of the world’s wealth. Each one of us has one SUPER Dollar in front of him. You own half of everything and so do I. I’m the government though. I get bribed into creating a Central Bank. You’re not doing what I want you to be doing so I print up myself eight more SUPER Dollars to manipulate you with. All of a sudden your SUPER Dollar only represents one tenth of the wealth of the world! That isn’t the only thing though. You need to get busy and get to work because YOU’VE BEEN STIFFED with the bill for the money I PRINTED UP to get YOU TO DO what I WANTED.

That to me represents what has been happening to the economy, and us, and why so many of our occupations just can’t keep up with the fake money presses.

By: James in London

James in London — Sat, 26 Nov 2011 21:09:06 +0000

Gary couldn’t live on the “interest” on his gold, there isn’t any. Not so helpful advice.

By: Dick Fox

Dick Fox — Tue, 22 Nov 2011 14:46:15 +0000

In the Theory of Money and Credit Mises did not talk of inflation and deflation but of inflationism and deflationism. He talked of those who sought to change the exchange value of money to gain some advantage. Mises always saw money as a medium of exchange; therefore, a "monetary system" must give allow the widest application to maximizing this function. Mises understood that the best system to maximize the function of money would be to let the market determine the system and he also recognized that the market had primarily determined that a gold backed unit was optimal. As he recognized there is always inflation and deflation in our economy. Money must have the flexibility to adjust but it must have an anchor to prevent it from being abused by the monetary authorities.

By: FDominicus

FDominicus — Tue, 22 Nov 2011 11:34:32 +0000

Very important:
“There is always either inflation or deflation”

But there is no constant inflation overall. And that is what there is really. Just when was the really very harsh deflation?

See now the US. Is the economy struggling. Yes it is, is there a deflation? No there is not. So in fact the money supply is still inflated and we have a steady and harsh inflation without any break.

By: Don Lloyd

Don Lloyd — Tue, 22 Nov 2011 08:41:44 +0000

The idea of a single demand for money, since money serves multiple purposes with a wide range of values, makes no more sense than a single demand for liquids, comprised of water, paint and insulin.

Regards, Don

By: Mushindo

Mushindo — Tue, 22 Nov 2011 08:01:42 +0000

Contra the later Mises, perhaps we can say that, given monetary policy exists as a praxeological concept, inflation also exists as a praxeological concept: Its a verb, not a noun.

By: Nathaniel

Nathaniel — Tue, 22 Nov 2011 02:39:09 +0000

The page numbers of the quote in the Scholar’s Edition of Human Action are 419-20.

By: Ray

Ray — Tue, 22 Nov 2011 01:15:55 +0000

Aha – the penny has dropped for me!

By: Andras

Andras — Mon, 21 Nov 2011 23:35:28 +0000

Greg,
Gary should have bought gold instead of trusting the government. He can still do so.
Even under the communists in Eastern Europe, pensioners could stay afloat as long as the system functioned. Then it collapsed and they lost everything
Why would it be different under a fascist sytem in the US?

By: greg rush

greg rush — Mon, 21 Nov 2011 22:30:40 +0000

I haven’t seen anyone really focus on the dire effects that incredibly (artificially) low interest rates are having on the elderly in our society. People I know saved diligently throughout their working careers to put away what they thought was a substantial amount for retirement. A good example is friend Gary put away $210,000. He had been getting 5.8% on a ten year note, that gave him a bit over $1000. a month. That plus a small social security check left him in pretty good shape. Now his note expired and he needs to do something to keep going. If he takes out another ten year, he’ll be lucky to get much over 2.0%. Well, that’s going to give him less than $350. a month. So, prices are rising, despite government claims to the contrary and he sees his income dropping by a significant amount. He’s too old to go back to work, now what? Of course-he’s going to have to tap the principal. He’s likely to run out of money before he dies. This is a proud man. Never asked anyone for a thing and worked hard all his life, but he sees the day coming when he’ll have to. This story is multiplied by the millions across our nation. The scoundrels in charge act like we’ll never notice that they’ve chosen to screw the most responsible and vulnerable segment of our people. Holding down interest rates and protecting the banks is going to discourage anyone from saving for retirement It’s a fools game. And I, along with most of my age group, fell for it.

By: Giovanni P

Giovanni P — Mon, 21 Nov 2011 22:30:12 +0000

My mind completely changed. No more terminology useless discussions on the meaning of ‘inflation’. May this word stay with its mundane friends ‘development’, ‘industry’ and ‘withheld capacity’.

By: Tom E. Snyder

Tom E. Snyder — Mon, 21 Nov 2011 22:04:09 +0000

I’m confused. Does this mean that the Fed can print all the money it wants and it won’t affect the price level?