June 17, 2009 – 9:03 am
Inflation is rising prices in general
Inflation is best described as a net expansion of money supply and credit.
Deflation is logically the opposite of 1. or falling prices in general.
As the inflation-deflation debate rages, I have noticed several different definitions of inflation at play. Lacking disclosure as to who is using which, you can prove almost anything you want. Case in point: Mish uses a definition that rests on what the big shots are doing in the credit markets:
It’s not a bad definition for its purpose, but by it you can prove prices are going down despite what you see at the pump. My definition tells me how much an out-of-work construction worker has to fork over for a six pack. That means I watch the US dollar index USD because that’s what tells me how much a dollar is worth, which tells me how much beer I can buy. Check out the nice graph from SilverPricesNewsletter. I mean take a good close look.
Still no inflation?
How many six packs you wanna bet?
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