<DrumBeat: April 12, 2007The Oil DrumJeremy Gilbert's Comments on TOD Saudi Analysis>

248 comments on The Case for Inflation from a Plateauing Supply

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kjmclark on April 12, 2007 - 12:52pm Permalink | Subthread | Parent | Comments top

Jeff, I really wish you had described the two definitions of inflation in common use in your post. We're bound to have dozens of posts simply arguing about the definition of inflation. I know it ticks off Austrian school followers, but most people do not agree with the Austrian school definition of inflation. This almost always devolves into a shouting match between the two definitions because people don't specify which definition they're using.

The Austrian school definition isn't "right" and the general level of price definition isn't "right". They are two definitions that are considered equally valid by their different adherents.

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GreyZone on April 12, 2007 - 4:25pm Permalink | Subthread | Parent | Comments top

Did you bother to read Jeff's article? He stated his definition of inflation and his classical leanings at the very beginning! He doesn't have to repeat it 55 times because someone refused to read.

Ghawar Is Dying
The greatest shortcoming of the human race is our inability to understand the exponential function. - Dr. Albert Bartlett

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kjmclark on April 12, 2007 - 4:46pm Permalink | Subthread | Parent | Comments top

Of course I did. He didn't acknowledge that there are two definitions of inflation and that he was using the less common, but maybe more rigorous, definition. His statement was also a bit ambiguous as to whether he was using the Austrian School definition of inflation or the Austrian School theory of interest rates. If *you* read his statement, you'll see that he referred to the Austrian School WRT interest rates, but didn't indicate that WRT his definition of inflation.

You have to realize that the Austrian definition of inflation is *not* the common accepted definition. Look up the Wikipedia definition of inflation and you'll see this. That *certainly* doesn't mean that the Austrian School definition is wrong, but when you're using an uncommon definition of a commonly understood word, you're better off acknowledging the discrepancy up front and making it clear you're using the less common version.

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GreyZone on April 12, 2007 - 5:48pm Permalink | Subthread | Parent | Comments top

Whether he labeled it or not, he clearly stated his definition.

Inflation is the decrease in purchasing power of a currency due to an expansion in the supply of that currency ('printing money') and the interest rate offered by that currency's central bank.

How much clearer does he need to be? Is this like "depletion", which many around here confuse with "decline" but which is actually what happens from the time the first drop comes out of an oil well? Do we expect the readers of this site to be conversant with the word depletion and what it really means or the commonly accepted (and incorrect) version?

Ghawar Is Dying
The greatest shortcoming of the human race is our inability to understand the exponential function. - Dr. Albert Bartlett

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Halfin on April 12, 2007 - 6:08pm Permalink | Subthread | Parent | Comments top

(Comment deleted, I was confused.)

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