Topic: Inflation is always and everywhere a monetary phenomenon -- Milton Friedman (Read 368 times)

On a very low enough time-preference, this is true. I hope newbies understood that. Because of Bitcoin’s infamous high volatility, there will be market cycles that you might be HODLing with a loss, depending when the person has purchased his/her coins. When in doubt, ZOOM OUT.

Keep enough cash around for your needs and in the case of an emergency, however the rest of your money should always be invested in something that can outpace inflation, right now paper assets are still performing well, so it is fine to hold stocks and other similar instruments.

However when a crisis really strikes paper assets have the tendency to do the worst as people are looking for a safe haven that can preserve the value of their money, and in that case assets like bitcoin or gold will be in high demand, and with this in mind then it is better to invest in bitcoin right now before its price goes up even more.

I have dislike savings ever since my eyes was opened into financial world, savings is just like been a slavery to bank and other forms of banks.
Inflation is just something we cannot control but can be reduce to minimal by making sure that the economy is well perfectly executed in every segment of economy but when one part is affected, it will affected others and inflation will rise especially agricultural sector and importation.

The problem with this is that they are only delaying the inevitable, I understand your argument and it makes sense, however the more they delay a corrective crash that takes the economy to more realistic levels then the harder the fall will be when it happens.

At this point it should be obvious that a collapse of the fiat system is inevitable, it will not happen tomorrow of course and it may even take decades, but the longer this is delayed the bigger the impact will be when it happens, so it could be argued it could have been better to let the market crash at the time, change the economic system currently in place and begin the recovery already.

This week was indicative - the Bitcoin drawdown. What do you think - positive feelings were experienced by people who wanted to save money, but in 1 week they suddenly became 10% less. During the week. Assets in bitcoin ... It's good that the fall has stopped, but bearish trends are still ahead, how will you model the behavior of the holders? And what is very important - unlike you or me, they do not understand this market at all, and do not understand what to do. Most likely, the "panic sale" will be a reaction of the extras storing their meager reserves in bitcoin at the beginning of bearish trends ...

I do believe that inflation rate is a horrible thing in most nations, however USA is a bit different in that case. They increased it knowingly because they wanted to liven up the market once again during/after pandemic. Which meant they gave out a ton of money, and stopped the market from collapsing and that resulted with them being a lot better during this period. The alternative would have been preventing inflation and that would cause a lot of unemployment and a lot of people starving and a lot of rent not paid and many other horrible situations.

This is why I believe that we are definitely looking at something that could be done properly with inflation and then they could just reel it back into regular times next year without a problem. This isn't to say they should do it all the time, it just means that they did it once to help the nation and it did and now they can go back. The bad inflation is the one that happens unknowingly, this was calculated move.

Agree that current inflation is a direct result of their policies and weak governance. The mafia is strong enough to blackmail the government and its policies. Also, the weak policies factor cannot be neglected here. The problem is surely not the supply chain and in my opinion, underpaying the labor can be a key factor for the current inflation.  We need a balanced economic system that can regulate all these issues.

And this is what is slowing down the economy in a terrible way, after the pandemic most governments instead of understanding that businesses were affected massively by it and that they should reduce the taxes so the economy recovered they did the opposite.

So not only many of the businesses that closed their doors did not comeback but the creation of new businesses to take their place went down as well, so with their greed they are suffocating the economy while at the same time the politicians sell themselves as the ones with the solution, when they are one of the sources of the economic problems we are facing.

Inflation is a normal thing in each country. Every country experiences this, and it's a part of the flow of an economy. However, what isn't normal is the sudden rise of inflation rate in a short span of time. Inflation is always there whatever the status is of a country. Even the richest country faces inflation but with a minimal rate only because they know how to utilize their resources and maintain the stability of their economy which some countries fail to do so. Hence, it results to rapid increase of inflation rate which is very alarming most especially on the consumer's side since the consumers are usually the first ones being affected whenever arise of inflation happens. The next impacted people would be those small and local business owners which have a very small capital and profit. Whenever inflation raises, they are negatively affected because their goods sales decline due to low purchasing power of their local currency, which makes the people to buy less. Most of the time, people would rather buy items that are imported internationally because it has cheaper prices. In result, small and local business owners suffer losses. There were even times that they would have to beg for their products to be sold just to get their capital back. I am speaking only from my observation here in our country. This might now happen to those big countries, but it really exists mostly in developing and third world countries.

Now, given the pandemic, inflation was pushed to the brink due to mishandling of the public servants that instead of doing their very own job, prioritized first their self-interest and gains. Which caused a very big trouble since people are dying and suffering, then another problem just added up. It just felt so burdensome. Greedy politicians should have no place in power and position because they just keep on doing what favor them every single time. The cash aids intended for the poorest of the poor during this pandemic was corrupted. They even made a business out of the pandemic. They keep on saying that there's no more money left and they have to borrow funds for the betterment of the country, but the truth is they are pocketing the taxes of the citizens instead of using it for the country's welfare. The government would say that there is low supply and demand, when in fact they are just manipulating it so that the prices would go up, and then they would have larger profits (because basically, they own a business or two about those products they told you that are low in supply. Eg: facemask, faceshield, PPE's).

I just hope our country's situation differs so much from what your country is currently in. Hopefully we'll all find the right ones in position to keep us all moving towards the right direction instead of abusing and taking us for granted because they just can. Inflation is a normal phenomenon; the problem is the government who is handling it without caution.

How much would be a good college education for the students next to our generation? It would be so unaffordable, that students will indebted heavily with student loans by the time of graduation. OR, go to a low-rated college, and find it very difficult to get a good job to pay for the student loan.

The United States of America alone has increased its prices up to 5% in this year alone and it is the highest increase in inflation since 2018.

Source: https://spn.org/blog/what-is-inflation/?gclid=CjwKCAiAnO2MBhApEiwA8q0HYZ-gjA--yr1NolePkIerP_Ir6--Pofj-Klv66B8_XGJI3zSWA-qIExoCOZsQAvD_BwE

Inflation rate isn't normal, it is indeed a phenomenon caused by the government itself alone to adjust their debt and won't rely on other sources anymore, also the USA has the biggest yearly budget on Defense alone, where would they get that budget? Inflation and taxes ofcourse. However, they will deny that accusations because they know more than anyone and they are just saying that inflation is caused by the increased demand of supply than services or goods being produced.

We have the same thing here as well. However that is getting lower and lower because people are turning it into crypto right away instead of other fiats. It does make sense, why would you want to keep something in fiat that will devalue insanely quickly, most people in other nations that have stable fiats can't even imagine it.

Imagine a world where what you buy for 100 dollars today will be 150 dollars in a year, yes 50% inflation and that is real all around the world. Unfortunately most money is collected in Europe and USA for retail investors (Asia has rich people but not rich population usually) and that means they do not understand the point of bitcoin as well as we do.

I keep my money in crypto so that in 10 years when our money is devalued and bitcoin increased that would mean that I will be an insanely rich person. Not because I made some super smart investment but because fiat always gets devalued around here.

In times of high or galloping inflation, people are looking for options as quickly as possible to convert the hourly depreciating paper into a stable currency or other financial instrument. I watched the period of inflation in our country in the 90s. The first thing everyone did after receiving their wages was to convert everything into dollars, German marks, British pounds. Those who had more money bought gold in banks and other similar assets. The poorest - yes, they bought canned food, crackers, cereals, pasta, salt, sugar ... After a couple of years, when everything stabilized, the first two groups had highly liquid savings, and the poor went to throw out tons of expired canned food and moldy cereals ...

Living in this or that state, we are forced to accept the "rules of the game" of this state. This is not good, this is not bad, it just cannot be otherwise. The state is obliged to try to give everyone a minimum sufficient standard of living, some kind of social security, pensions, etc. at the same time, there are still many mandatory criteria for the existence of a country. Yes, sometimes the state has to print money, not entirely provided with goods and services, but otherwise it will not be able to fulfill its obligations. The printing press is one of the government's management tools. You just need to accept that there is inflation, inflation cannot be avoided, it is good if it is predictable and stable enough. Therefore, normal inflation is the same common entity as a strong sun or cold in winter - you just have to accept this and when managing your finances, take it into account, inflation, take into account

That's true that inflation is caused by the wrong economic policy. But such factors as lack of supply accelerate inflation so all factors influence on it. So as not to suffer from inflation too much, we need to invest but not jsut save. What is more, it will give us an additional source of money, so we will become financial free a bit more then.

Well know and quite true. Inflation is just a way of saying that the trading pair between "stuff" (goods and services) and currency is going in favour of "stuff". How can this be possible? Very clearly when there is too much money in comparison with the available "stuff", so it is a self evident truth that it has to be an effect deriving from a monetary policy and, being honest, of the "quantitative easing" which is how they call now printing money.

Corruption is the reason why money goes to nothing at all. Everyone believes that they are paying taxes when earning but everyone forgets that they are paying taxes when buying as well. Most nations have your earning taxed at least 70%, sure there could be less in some nations but majority charges 70%+ of your earning as tax.

Technically speaking ALL of the money is constantly getting taxed, all the earnings, and all the spending of those earnings, when you sell one apple you earn and pay tax for it, but also the buyer pays tax to buy it as well, and then you buy another apple to sell while paying taxes and the seller taxes you and then you sell it again and get taxed and your buyer gets taxed as well. It is all big taxing scheme by governments basically, greatest business in the world. Then what do we get? Few hospitals and couple of miles long roads and ton of promises, nothing else.

trudat.

https://youtu.be/xvxV95WcoSw?t=1615

watch the whole video if you can.

Maybe there are many views of friends here with the increasingly worrying economic conditions.  Inflation that is said to have been handled well does not produce as good a result as they claim.  In fact, there are many college graduates every year but it is difficult to get a good job because of low absorption.  It would be more interesting if the story about the funny people's representatives, who sat with extraordinary positions and facilities with the mandate to think about the people, actually forgot their responsibilities. 

The government job is regarded as no man's job especially in African and technologically less developed countries. The government pay huge salaries but the country get little service from the task payers money.

The worse is the taskforces and monitoring team that is suppose  to oversee the ethics of work and make sure employees do their bit of the agreement with government but they pick bribes instead of punishment. This type of attitude won't encourage sincerity in government at all levels.

The workers are suppose to work where the government pays hugely but the reverse is the case.

It’s actually high inflation that forces people to spend their money because, during periods of increasing inflation, the value of money goes down while the prices of goods and services go up.

In our country it's not the case because the problem is unemployment and underemployment, lots of workers available but few companies only offers a job and that resulted to increase in poverty. We also have a grant from the government but it's never enough to sustain a healthy living, so the main reason is the inability of the government to improve the economy, and that is brought by policies that are pro-capitalist because they are benefiting from it.

A corrupt government would lead to economic struggle, and resulted to a high inflation.

I quite like Milton Friedman's thinking, and not only that, but also how he explained his ideas.

This particular case of inflation is typical of a socialist politician: first he creates a problem, and when the problem is created he offers supposed solutions based on prohibiting and forcing as if he had nothing to do with the origin of the problem and instead he was going to offer the solution.

Biden has blasted Trump's energy policy, and when the price of energy goes up, he attributes it to external factors, as for example in the case of oil, which he blames on OPEC, as if the problem was not caused by him and as a solution to inflation he provides the infrastructure bill.

LMAO

What I don't understand is how there are millions of people who don't see that. Surely they think inflation is caused by supposed structural racism or sexism or something.

I think even manufacturers are having a hard time procuring materials for production. The pandemic has contributed truly to an extent in disrupting the supply chain and free flow of materials from field to manufacturer's industry. Even some of the recent government policies in various countries have also threatened the availability of work force, and free flow of raw materials from country to country. As a result, reduced quantity in supply and increased price for commodity must set in.

High inflation. High oil and transportation costs. Supply chain issues. Now is a great time to grow fruit trees in 5 gallon buckets.

A big tree is not necessary to grow fruit. It can be done in a smaller and more compact unit. To ease dependency and negative economic trends.

Its not a good time to rely on governments for assistance. Or to expect the state to save you. Best to take matters into your own hands anyway you can.

The problem for them is that they are losing control of the narrative, why the governments insist so much and state over and over again the inflation is being caused by supply chain issues? Because the inflation is simply too high for the population to ignore.

So they need to create a scapegoat so people do not turn against the governments and blame them about what is happening, however even if they are successful now they have another problem, people are now taking precautions against a potential crisis and this means less consumer spending, which slows down the economy, and there is a renewed interest in investing in a store of value, benefiting bitcoin in the process.

It's complete bullcrap whatever the transitory agenda that these policymakers are trying to pump out.

It's here to stay, and it is not by accident. Completely by design.

The fact that fiat does not have a supply cap means that this has to happen in the long run. It does not have intrinsic value and will go to zero.

That's a pretty narrative, but I don't think any of it is correct.

My understanding is that an intentional low rate of inflation is like the tail on a kite. The shorter the tail, the more unstable the kite. But the longer the tail, the more it weighs the kite down.

Personally, I think inflation is more like opium. At low doses, it subdues a person, making them lethargic and unresponsive, but happy. At high doses, it kills the person. The real question is whether or not the opium actually helps.

The labor rate was low and the rate at which the government and the central bank kept pumping in money into the economy was high. From the start it was already being said that something like this was bound to happen: there is going to be an inflation and the rate of inflation is going to be high for sure.

We should be looking at the ways that the government would be able to fight and tackle inflation. And while looking at the ways that these can be done, we should understand that these means of tackling inflation can as well affect the people, take for example when the government tries to use wage and price controls in fighting inflation. So any means that we decide to use should not be too harsh on the people.

What's wrong with the consumer deciding what to do with their funds and why would any consumer not use their purchasing power to purchase goods? I understand what deflation would do, but clearly there are hardly any countries in the world that can handle their inflation rate at a solid 2 percent without going over, so why bother having central banks involved? And even at 2 percent, imagine someone siphoning out a minimum of 2 percent out of your bank account every year in the best case scenario, with the most probable scenario 3+ percent in some off years, and 5+ percent in worst years.

What do you dislike about controlled low inflation? This forces people not to freeze assets, but either use them (buy goods / services), or invest ... That one thing or the other launches a very important process of "money movement" in the economy. And this is essentially a synonym for the blood flow in our body in our circulatory system. If it is slow, all processes freeze, our activity tends to 0, there is no strength, we become incapacitated. It is the same in the country's economy when money stops active circulation. And then gratitude, and inflation including

Well, this is one of the reasons it was recommended that government pay those who are working or solving problems so you don't have to pay those creating the scarcity/inflation or those who aren't working well enough to contribute to society.
Paying able-bodied people to do nothing is such a dumb idea. Those who practice that as leaders are not worthy to continue to lead

That's the main problem, absolutely, but I do think those supply chain issues are playing a part in this--for whatever reason, be it that people aren't taking jobs in that supply chain or logistical issues or what have you.  It's damn hard right now to buy cat food at the grocery store in any quantity that my kitties like, so something's definitely wrong with moving product from manufacturer to store shelves.  Demand has probably been driven up as people have started to hoard everyday things (like the aforementioned cat food), which would obviously contribute to prices going up.

But as I said, I agree that the major culprit has been the government and their reckless fiscal policies.  Joe Biden didn't start all of this in the US, nor was it one single politician or even one country.  It's been an ongoing nightmare since at least 2008.

Yeah well, the music is going to stop abruptly (and probably soon) and after that, everyone will be scrambling for jobs.  Better secure employment now before the job market dries up if you're currently unemployed.

The Fed’s response to inflation.

1. The Fed will say there’s no inflation.

2. The Fed will say there might be some inflation, but it’s transitory.

3. The Fed will say there is inflation, and they will do something, but there might be nothing they can do.

4. The Fed will say, “it might be late”.

I fully agree with this statement. Inflation is being created by the government due to their monetary policies. Officially the inflation target is 2% in most countries, but I believe that the government's have a hidden target that is much higher. When it comes to inflation the politicians don't care about the little guy who loses all his purchasing power. Its all about the benefits of the indebted countries. With a higher inflation the government has to worry less about repaying their debt, because all newly issued debt will be more valuable. Also we shouldn't forget that the central banks are very reluctant to increase the interest rates. With rates near 0% it was just a matter of time to see inflation rates above 4%.

There could be many causes why a government will print more money, we can look at the history itself which every country who had experienced the same thing even the Germany that is ever rich in the EU countries had been there. China which today has considerably has the biggest today had once been that low. But we keep the example of Zimbabwe because it's recent where the money filling up on top of the cartwheel is worth less than the cartwheel itself.

Inflation is a monetary phenomenon but the US situation is different. They know they can prevent it from happening but it's continuing to be done so. You really have to watch the news on both sides, the news from the US and the news from China because this cold war will be more brutal and the phase is slow.

You don't wanna go cold/trade war with some countries when you know they are your biggest trade partner because both of you will be affected especially when winter comes. But this health crisis makes it worse.

The one single thing that has kickstarted inflation is the response by governments
around the world to the financial  effects of COVID by printing money and continuing
to do so.

The average Joe and Jane dont understand this or the finer points of inflation so
governments can blame what they like but the vast majority are financially illiterate.

Because of COVID and the reopening of society there are now shortages in transportation,
goods, containers and staffing, these are also feeding the affects of inflation.

Here in Europe we also have an added issue in the form of BREXIT, this is also having its own
issues in the form of the above
transportation and goods shortages, for some EU countries more than others.

When they told us the truth to expect the truth from them about the current inflation rate is increasing?

Many Central government still reports the false number to keep the inflation rate low so they assume that people will appreciate the government for doing excellent work even in the pandemic situation.

If you read books about macroeconomics,you know that there are two types of inflation.
The first one is caused by the increasing money supply(the one you are writing about) and the second one is caused by increased production costs(oil and gas prices going up).The second type can lead to stagflation sometimes.The production cost inflation can be influenced or even caused by the money supply inflation.
Perhaps Milton Friedman is right.
The politicians/governments are addicted to inflation,because inflation decreases the value of all debts and increases the tax revenue.
I don't know about the supply chain issues in your country.There aren't any supply chain issues in my country.
Maybe this problem isn't necessarily linked to inflation and money supply.The closed borders and all the lockdowns in 2020 kinda destroyed some supply chains and those supply chains have to be rebuilt.

Not just their policies but also due to the lack of control they had during the pandemic. The situation could have been handled in a better way but unfortunately now the prices of basic things are sky rocketing.

Inflation is healthy if you consider the small amounts every once in a while but when we are looking forth into the whole system, I think we are 10 years ahead which is negatively stressing the economic growth.

Blaming is just a green card to maybe get votes in the next elections. In few countries they tried to bribe with the huge stimulus check as well.

There are so many shopping complexes that are dying, the surge in the COVID cases are going to sky rocket in my country in approximately 2 weeks, which would have drastic impact on the whole situation as well. But as I have seen, people still love to go to the restaurants but government have changed some rules, now no one is allowed inside without a vaccine or a recent covid-19 negative PCR report which I do think is really interesting and might be working on some levels as well.

They are just making up stories to make sure that they wouldn't be blamed for what the economy is now.

It's just that they felt too much power that they think it's going to be as easy as that but not really. It is everywhere because a lot of people are corrupt and just want to benefit themselves.

I don't think it's just because of the government paying money to them but it's that people probably have found other ways to earn knowing that cryptocurrency adoption is on the rise.

I can only speak for my country. The level of inflation has risen beyond the government target. Of course, the pandemic is largely to blame. But, to be fair to the government, the supply chain is indeed one of the severely affected aspects of the pandemic. This is indeed one of the reasons why the prices are rising.

I'm never defending my government's failures. But I'm afraid there are no pandemic-resistant policies. There must indeed be a policy weakness or perhaps unpreparedness somewhere, but a pandemic that has been ravaging the country for a couple of years now will surely its toll on the economy.

What I didn't notice in my country, though, amidst this rise in inflation is the surge in demand of goods and services. On the contrary, demands on many goods and services are falling. Restaurants, stores, gaming shops, schools, hotels, resorts, and other business establishments are closing. Instead of companies having a hard time filling their demand for labor, what I'm seeing are companies in retrenchment, companies reducing labor force, even companies declaring bankruptcy.

There is poverty as a result of the economic impact of the pandemic. People are no richer today than the pre-pandemic months.

Inflation and supply chain are the new healthcare reform.

Americans have wanted to fix their healthcare system for decades. But never managed to learn enough about the basic fundamental workings of healthcare to comprehend exactly how it is broken. Everytime healthcare reform is put on the table, americans wind up supporting the policies that are worst for them.

In 2022, we're like eskimos who want to discuss the finer points of snow and blizzard conditions. But lack the proper terminology and shared experience to do so effectively. That's my take on inflation, supply chain difficulties and similar recent trends.

Of course, there are some who know and comprehend the basic principles. Who have published in depth journalistic pieces on these topics for decades. But no one listens to them. No one reads what they write. And so all of the important connections and conclusions aren't likely to be made by enough people. In the way that it needs to be for society to accurately and effectively respond to crisis, in the way needed to avert negative trends.

Politicians are telling us that the current level of inflation is caused by "supply chain issues". That is a lie. They are lying in order to hide the fact that rising inflation is a direct result of their policies.

The truth is what was said by the famous and highly respected economist Milton Friedman said: "Inflation is always and everywhere a monetary phenomenon." The problem is not the supply chain. The problem is that the huge influx of money into the economy from central banks and governments has fueled a tremendous surge in demand.

Companies can't find workers to fill the demand. Why not? Because the government paid everyone a bunch of money so they don't need to work. This is shown by the fact that the labor participation and unemployment rates are both low.