So yes, that is what inflation is, but it is not quite the cause of inflation. It's a necessary condition, but not sufficient. Something else besides more money, creates inflation. My theory was that because there is more money, suppliers anticipate this, or they see behaviors (like people being able to buy more), and then they see they can maximize more profit and increase their prices. — schopenhauer1
Or what would you declare an "ethical" price? The price that a supplier has to pay for the resources? The price that a supplier has to pay for resources plus a compensation his or her own "work"? (What on Earth is an "ethical" income for one's work?) — ssu
We are not forced into slavery now days. — ssu
Every employer buys our work and we have the option to either take their offer or not to take it. Remember that every person is the "supplier" of his or her own work. — ssu
Now days it's about just who gets the boost. Is it the few rich people or the one's working on the correct market sector, the one's in a labor union that has the ability to pressure the employers? Just what segment of the population get's the benefit? These things are complicated and politics come to the equation always. — ssu
If you give people $1200 and they spend it... — schopenhauer1
...you have inflation. — schopenhauer1
One is "simply" a function of the supply-demand curve. The other is a matter of ethics/morality and thus, beyond consensus. — Aussie
As I understand it inflation results when there is an overabundance of money and a scarcity of necessary and/or desirable items. — Janus
It's just the upward pressure on price that strong demand and low supply brings about. Individuals will charge what they are aware, or at least what they think, the market will sustain. I'm not sure what is puzzling you about this. — Janus
I'm not puzzled. I'm giving a theory behind WHY the prices go up. You cannot just say low supply and high demand. Actual human DECISIONS make these things happy. — schopenhauer1
They will raise prices only if the items they are selling are scarce, and there if plenty of money and/or demand for the times in question in the system. — Janus
And why would they raise prices when resources are scarce? — schopenhauer1
Because they believe they can sell the item for a higher price. — Janus
Right, so the only thing that could countermand that tendency would be governmental price regulation. — Janus
Sure, but if you are seller and you perceive that other sellers are raising their prices due to increased demand and short supply, would it not be rational to go with the flow? — Janus
Also increased money supply generally causes a currency to lose relative value in the money markets, which means that purchasing power of, at least, imported items is reduced; and this also pushes prices up — Janus
As I stated, this word can simply be used as a decision you agree with. — schopenhauer1
Sure, another issue, but possibly same origins on the micro-decision level. — schopenhauer1
I'm not saying I agree with the decision ethically speaking, that is a different questions. To have a rational reason to do something is either to have a deductively valid reason (which does not seem apposite in this kind of case) or a practically valid reason (which does seem relevant to the kinds of cases we are considering here). — Janus
The second question (about SHOULD) is meaningless until the first question is answered. Should it be the case that we always desire more? Is there a point at which we should be content? How are we to discover an answer to that? How are we to know we've discovered the right answer? Is there a "right" answer? It's attempts to answer the second question that has led to the plethora of political/economic philosophies. But even then, the answer to the first question, in my opinion, has remained unchanged. Across political and economic systems, mankind has continued to desire "more". It's why the supply-demand curve has done a reasonably good job explaining what we actually see...regardless of where and when we look (broadly speaking). — Aussie
I originally called it greed, and was chastised for it. — schopenhauer1
But can there be owners who don't actually raise their prices? Is it ALWAYS the case that someone will want to raise their prices when they see an increase in demand? Is that an inevitability? — schopenhauer1
But can there be owners who don't actually raise their prices? — schopenhauer1
Is it ALWAYS the case that someone will want to raise their prices when they see an increase in demand? Is that an inevitability? — schopenhauer1
...we (as a species) are never satisfied and always desire "more". — Aussie
Is it ALWAYS the case that someone will want to raise their prices... — schopenhauer1
You ought not have been chastised. Let's call a spade a spade. If by "greed" we mean an insatiable desire for more then that seems a fair description. — Aussie
Certainly. Markets are made up of thousands/millions of INDIVIDUALS making choices. There is absolutely room for differing choices. However, taken as a whole, markets show a strong tendency toward price increase in the presence of relative inflation...again, as a whole. — Aussie
I would say, no, ALWAYS is too strong a word in this instance. There can, of course, be those who choose a different approach. Tools such as the supply-demand curve describe markets in aggregate. They show us a picture of things similar to seeing someone in the shower through shower glass. You can discern a great deal about them (they're naked, they probably male/female, they have short/long hair, they're facing this or that direction, etc etc) but there are plenty of details the glass distorts. — Aussie
That is indeed the heart of markets :smile: . — schopenhauer1
2) It's certainly an aspect of real-world inflation. But you don't get taught that in the textbooks. — h060tu
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