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[Lord Shonus]

The problem is that concepts like "inflation" and "deflation" are actually extremely advanced economic topics, but they're so impactful that most people have some awareness of them anyway because the secondary effects are so obvious.


The other problem is that people really and truly don't understand that a certain amount of inflation is a good thing because if the economy expands and the money supply doesn't you're heading straight for a cliff. Likewise, outright deflation (which most people assume means the prices going back down) means "you're already over the cliff and speeding to the bottom".

[Grim Portent]

Weird thing is that the basic concept isn't hard to grasp or explain, at least by my own admittedly basic understanding. You could probably explain the gist of it to high schoolers with a short animation, or hell, a gas tank and some balloons.

Yes the stuff behind the scenes that causes inflation/deflation are often incredibly complicated and the sort of thing that makes my eyes glaze over in most contexts, but the basic idea of 'deflation almost always bad, low inflation good, high inflation bad, rampant inflation very bad, causes are complicated and hard to control' feels like something that would be easy to teach.

Then, most countries including my own UK don't really teach anything much about economics or politics to teenagers for some reason. In retrospect I feel a civics class would have been more useful than RE was.

[heydude6]

Inflation can be a confusing concept because sometimes the prices rise in ways that have nothing to do with it.

Imagine you're selling apples, one year there's a bad harvest so prices rise due to scarcity. That isn't inflation, that is the true value of the good changing on the market.

Now imagine you have a globalized international order that relies on complex supply chains between multiple countries to manufacture everything. Suddenly, it's disrupted by some sort of natural disaster (say a pandemic). The price of basically everything will start to rise then, because everything has become scarce making it more valuable.

In the real world, the most common way to measure inflation is the Consumer Price Index (CPI), which tracks the average change in price of a standardized "basket of goods". This model will erroneously attribute the price increase in our previous scenario to "inflation" when its really something more complex than that.

[JoshuaFH]

I'm suspicious of Keynesian Economics. I'm obviously not an expert economist but the notion that it's an inviolable law of economics sure doesn't pass a sniff test for me. It reeks of the kind of capitalist propaganda that is so deeply ingrained and so oft-repeated that it is just accepted as fact without question. That's no refutation, but at this point literally everything that's been fed to us from on-high should be viewed with suspicion.

[heydude6]

Which specific part of Keynesian Economics do you disagree with? It's a broad theory that covers many different areas. Keynes wrote a lot of things back when he was alive.

[JoshuaFH]

Actually nevermind, I don't know shit. It's haughty to think I can meaningfully disagree with an actual great thinker.

[Folly]

Philadelphia plane crash.

If I saw that in a movie, I'd say the pyrotechnics team massively oversold the explosion. No way a plane crash should look anywhere near that flashy in real life.

[lemon10]

Inflation can be a confusing concept because sometimes the prices rise in ways that have nothing to do with it.

Imagine you're selling apples, one year there's a bad harvest so prices rise due to scarcity. That isn't inflation, that is the true value of the good changing on the market.

Now imagine you have a globalized international order that relies on complex supply chains between multiple countries to manufacture everything. Suddenly, it's disrupted by some sort of natural disaster (say a pandemic). The price of basically everything will start to rise then, because everything has become scarce making it more valuable.

In the real world, the most common way to measure inflation is the Consumer Price Index (CPI), which tracks the average change in price of a standardized "basket of goods". This model will erroneously attribute the price increase in our previous scenario to "inflation" when its really something more complex than that.

I think the issue is more basic then that.
When inflation is high you are getting screwed harder.
When inflation is low you aren't getting screwed any harder.

So when economist go "Good news everyone, the economy is great because inflation is low" they are really saying "Good news everyone, you aren't getting screwed harder", not "you aren't getting screwed".
Which if you spend the last two years getting screwed because of high inflation means you are still getting screwed.
What people want is to get *unscrewed* which isn't going to happen because prices very rarely just go back down.

In economics, inflation is a general increase in the prices of goods and services in an economy.

If prices rise across the board for any reason that's inflation by definition no matter the cause.
It doesn't matter if its because of less supply or more demand or because greedy companies are abusing their market power or because of a global breakdown of production and shipping due to a pandemic, its all inflation.

I'm suspicious of Keynesian Economics. I'm obviously not an expert economist but the notion that it's an inviolable law of economics sure doesn't pass a sniff test for me. It reeks of the kind of capitalist propaganda that is so deeply ingrained and so oft-repeated that it is just accepted as fact without question. That's no refutation, but at this point literally everything that's been fed to us from on-high should be viewed with suspicion.

IMHO Keynesian economics is  much less problematic/capitalist propaganda then neo-liberal/Boston school of economics.

[Starver]

In retrospect I feel a civics class would have been more useful than RE was.

That might depend if the situation gets so bad that you feel like the only thing to do is pray!

Spoiler: Seriously, if you want to know about my own R.E. experiences... (click to show/hide)

For years 1-3 R.E. (whatever those are in K-12 'new money'), we had Mrs C teaching "religious history" that was mostly Christian but with none of the 'fun' bits, and very little of the fun bits of the other creeds that crept in by default. We actually got less "religious indoctrination" than just naturally arose in the morning assembly, though, so it wasn't as bad as others' experiences, but it was a bland lesson, as was Music class (also taught by Mrs C.), which certainly started off in a very uninspiring manner as we had to copy into our books the history of 'early' music (i.e. the monastic tradition, but not because of the religiosity). I was inspired neither for the Cloth nor for the Orchestra Pit, but I'm also sure that this wasn't really the purpose of either lesson...

Years 4 and 5, the (statutory, but minimal) R.E. class was now taught by Mr R. (who had been my inspiring Geography teacher in years 1-3[1]). Now, he was able to pass on his experiences in several past school appointments in areas with (vastly different) diversity of home-religions. Again without any hint of "indoctrination", I got a fairly good grounding in the priniples of the other two main Abrahamic traditions as well as some amount of Hinduism/Sikhism and a smattering of even more 'exotic' faiths.

Anyway, so I probably didn't learn to pray in R.E. Really, I learnt the Lord's Prayer when I had earlier and separately joined the Cub Scouts, but I managed never to let that harm me, and at least it wasn't the Boys' Brigade.

Still, if you wanted me to both explain and immediately invalidate the joke, here you are.

[1] With years 4+5 geography now taught by Mr T. who[2] didn't inspire me at all when it came to the actual point of exams. Probably most dissappointed in my Geography result, actually. It was as bad as my French grade, and I hated French, had no disposition for languages and cared not one jot for any of the teachers of French.

[2] Perhaps due to a stint in a vietnamese US military prison with one of the Magnificent Seven, a Viper pilot and a Starfleet engineer. But, more likely, just because he had other more senior duties around the school and would rather "leave us to it", which suited the other (reluctant/"at least it's not History!") nascent geographers more than it did me.

Keynes wrote a lot of things back when he was alive.

Yeah, but he hasn't written quite so much since...  Or maybe that's what I didn't pay enough attention to, during Mrs C's tenure at teaching R.E...!

[heydude6]

Actually nevermind, I don't know shit. It's haughty to think I can meaningfully disagree with an actual great thinker.

Best you can do is agree with a different great thinker who happened to disagree with the previous one.

Keynes definitely pushed the field of economics forward. He was the first economist I was introduced to who questioned the idea that Laissez Faire always leads to the best outcome, or that you could count on people to behave as rational actors. But that doesn't mean there weren't improvements to be made.

Keynes was one of those economists who wasn't really a fan of the concept of people having savings. Money sitting in a bank was money that wasn't circulating around the economy and generating value via the funding of goods and services. Other economists disagree, saying that money doesn't "sit" in a bank. It gets lent out to businesses who can then invest it into big long-term projects like factories, farms, or mines, that you would never expect individuals to pay for on their own. They say it's only these types of actions that truly grow the economy in a meaningful sense.

This was the first piece of "Post-Keynsian" thought that truly resonated with me. A company that decides to "improve" their products by making them break more often does a valuable service according to Keynes because he's forcing the consumer to not hoard money. It brought me some relief to see that some economists stand up for the idea of people having money.

I think the issue is more basic then that.
When inflation is high you are getting screwed harder.
When inflation is low you aren't getting screwed any harder.

So when economist go "Good news everyone, the economy is great because inflation is low" they are really saying "Good news everyone, you aren't getting screwed harder", not "you aren't getting screwed".
Which if you spend the last two years getting screwed because of high inflation means you are still getting screwed.
What people want is to get *unscrewed* which isn't going to happen because prices very rarely just go back down.

Simple and elegant, hard to disagree with that. The only thing people can realistically hope for is wage growth that can offset existing inflation. Sometimes economists will report on that, but it's a much harder metric to target than reduced inflation, so you don't get positive headlines for it as often.

In economics, inflation is a general increase in the prices of goods and services in an economy.

If prices rise across the board for any reason that's inflation by definition no matter the cause.
It doesn't matter if its because of less supply or more demand or because greedy companies are abusing their market power or because of a global breakdown of production and shipping due to a pandemic, its all inflation.

If that's the actual definition of inflation then I am disappointed. It's too broad and lumps in too many different causes. The most common way of dealing with inflation is monetary policy, but stuff like Covid induced price increases can't be solved by lowering interest rates.

My definition of deflation and inflation is simply rises and falls in the purchasing power of the dollar, and I define purchasing power as the ratio of the Money supply to the aggregate value of all goods in the economy (aka. Stuff). This is the definition my previous post was based on. If you print more money without making more Stuff, you get Inflation since more dollars are competing for the same pool of limited resources and vice versa, though the latter rarely ever happens because we're always printing money. If the economy (ie. Stuff) is always growing, then it makes sense to always be printing in order to keep up.

The reason why I prefer this definition is because it takes the focus off of price and puts it back on value. Keeping the focus on value prevents fallacious thinking that could lead to bad policy like Price Freezes or Money Printing. "Prices are too high? Just lower them by decree! That will solve Inflation as it is defined by Wikipedia!". Instead you deal with the new problem of all stores being sold out on goods.

[lemon10]

If that's the actual definition of inflation then I am disappointed. It's too broad and lumps in too many different causes. The most common way of dealing with inflation is monetary policy, but stuff like Covid induced price increases can't be solved by lowering interest rates.

Correct, its very broad and lumps in many different causes since at root its a very simple thing even laypeople can understand. Some of these causes can be dealt with via monetary policy, but many fundamental issues that cause widespread issues in supply (such as being invaded or a neighboring country raising tarrifs and screwing over your trade) cannot be solved with monetary policy.

I imagine there are formal names for specific types of inflation if you were in economics.

My definition of deflation and inflation is simply rises and falls in the purchasing power of the dollar, and I define purchasing power as the ratio of the Money supply to the aggregate value of all goods in the economy (aka. Stuff). This is the definition my previous post was based on. If you print more money without making more Stuff, you get Inflation since more dollars are competing for the same pool of limited resources and vice versa, though the latter rarely ever happens because we're always printing money. If the economy (ie. Stuff) is always growing, then it makes sense to always be printing in order to keep up.

The reason why I prefer this definition is because it takes the focus off of price and puts it back on value. Keeping the focus on value prevents fallacious thinking that could lead to bad policy like Price Freezes or Money Printing. "Prices are too high? Just lower them by decree! That will solve Inflation as it is defined by Wikipedia!". Instead you deal with the new problem of all stores being sold out on goods.

Inflation is the decrease in the purchasing power of a currency. That is, when the general level of prices rise, each monetary unit can buy fewer goods and services in aggregate.

I disagree with your definition; services obviously have value too and should be included. But also that wouldn't work.
If the government decrees that the price of food is now 20% lower and can't be increased any more 1) You will rapidly run out of food as people buy more and people stop selling it, and 2) People will buy and sell it on the black market for significantly increased prices.

For #1 the purchasing price of potatoes is infinity, the markets simply won't have potatoes for you to buy. For #2 it has a clear price, which would be the actual cost of potatoes on the black market. If you had the data presumably an economist would easily pick #2 as the price. In neither case has the actual value of the potatoes decreased, and thus it would not actually lower inflation.

Of course things are rarely so cut and dry, if the market has potatoes half the time what price would you pick? #1? Somewhere between #1 and #2? Just cross it out and stick a big N/A on the price when you are doing inflation calculations? What if the official price stays the same over time but the black market price doubles?

If you control the economists as many dictators locally do then yeah, you can lie and say you have solved inflation by just lowering the prices the same way you can "solve" not having enough money by printing more, but of course it isn't actually true and won't fool any economists outside the country, or even really fool the people inside the country pissed off that potatoes only exist on the black market.

This was the first piece of "Post-Keynsian" thought that truly resonated with me. A company that decides to "improve" their products by making them break more often does a valuable service according to Keynes because he's forcing the consumer to not hoard money. It brought me some relief to see that some economists stand up for the idea of people having money.

The first economist says to the other “I’ll pay you $100 to eat that pile of shit.” The second economist takes the $100 and eats the pile of shit.

They continue walking until they come across a second pile of shit. The second economist turns to the first and says “I’ll pay you $100 to eat that pile of shit.” The first economist takes the $100 and eats a pile of shit.

Walking a little more, the first economist looks at the second and says, "You know, I gave you $100 to eat shit, then you gave me back the same $100 to eat shit. I can't help but feel like we both just ate shit for nothing."

"That's not true", responded the second economist. "We increased the GDP by $200!"

I mean... you aren't *wrong*.

[JoshuaFH]

This was the first piece of "Post-Keynsian" thought that truly resonated with me. A company that decides to "improve" their products by making them break more often does a valuable service according to Keynes because he's forcing the consumer to not hoard money. It brought me some relief to see that some economists stand up for the idea of people having money.

The first economist says to the other “I’ll pay you $100 to eat that pile of shit.” The second economist takes the $100 and eats the pile of shit.

They continue walking until they come across a second pile of shit. The second economist turns to the first and says “I’ll pay you $100 to eat that pile of shit.” The first economist takes the $100 and eats a pile of shit.

Walking a little more, the first economist looks at the second and says, "You know, I gave you $100 to eat shit, then you gave me back the same $100 to eat shit. I can't help but feel like we both just ate shit for nothing."

"That's not true", responded the second economist. "We increased the GDP by $200!"

And in this example the guy that is shitting on the road is getting exploited for his labor.

[King Zultan]

Just goes to show that even the weirdest fetishes can stimulate the economy.

[Magmacube_tr]

I am shooting the fucking joint in Santorini, baby!

(Volcano alert in Aegean Sea.)

[Magmacube_tr]

Jokes aside. I am fucking serious. Genuine volcanic activity alert on Santorini Island. How serious? ''600+ earthquakes in a span of two days'' serious.