Re: When even a Republican can see it....

In article <c7bp83hsmp9pfa7f9qn9hpfpr96idcpn3g@xxxxxxx>,
mike weber <fairportfan@xxxxxxxxx> wrote:

On Wed, 04 Jul 2007 20:51:15 -0700, David Friedman
<ddfr@xxxxxxxxxxxxxxxxxxxxxxxxx> wrote:

Unless sufficient additional money is produced to cause the inflation,
essentially correct. "Wage push inflation" and "inflationary spiral"
didn't, I think, ever make much sense, and I don't think the ideas have
been taken very seriously in economics for quite a while.

So why does the Burger King Whopper that cost me thirty-nine cents
when i was twelve now cost me somewhere around three dollars?

*something* has been driving inflation for the last fifty years or so.

Yes. The government--more precisely the Federal Reserve--expanded the
money supply. Eventually the economists who thought that was what as
going on persuaded most of the ones who didn't, the evidence being
pretty clear, and the Federal Reserve altered its policies, with the
result that U.S. inflation rates have been low for quite a long time.

Similarly, prices were generally falling in the late 19th century, with
more and more countries going on the gold standard, general economic
expansion, and not a lot of gold being mined. Then the South African
gold fields were discovered, the cyanide process for extracting gold
from low grade ore was invented, and gold suddenly became an
inflationary metal--although inflation on a small scale compared to what
can be done with paper money.

I think it was my father's line that cyanide killed Bryan, politically
speaking. His "free silver" campaign reflected the fact that prices in
gold had been trending down, which was unfortunate for debtors, since it
meant that the real value of their debts was increasing. When gold
became an inflationary rather than a contractionary money, the issue
went away.

--
http://www.daviddfriedman.com/ http://daviddfriedman.blogspot.com/
Author of _Harald_, a fantasy without magic.
Published by Baen, in bookstores now
.

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