Re:The Gold Standard and the Great Depression (1997)
by louloulou on Tuesday October 26, 2021 @05:01PM
(#29006212)
> The point stands: CPI inflation is the one that actually affects us.
If your only purpose in life is to be a "consumer", sure. But changes in relative purchasing power between people also distort you're ability to affect the world. Increasing purchasing power of a bank or home owner relative to a saver through policy decisions increases their power to affect the world relative to the saver. This ability to arbitrarily choose winners and losers is not what you want in a monetary system IMO.
Edit: ability to affect the world as well as freedom to act, since you can substitute money for your own time.
"Purchasing power" is exactly CPI inflation, not monetary inflation.
> And I would say my personal CPI seems to track money supply inflation pretty closely.
This I can buy. If the CPI figures are wrong, then we need to get ones that are right. But CPI inflation is still the one we actually care about.
Why should we not care about monetary inflation? Well, say the population doubles. Either the monetary supply has to double, or each dollar is worth twice as much. (In case you think "that sounds good": it stinks if, say, you owe a mortgage and each dollar you pay back is twice as valuable.)
Yes, I know that's not why the monetary supply inflated over the last 15 years. The point stands: CPI inflation is the one that actually affects us.