Yep, innovation means prices understate the true level of inflation. Eg: If technology reduces costs by 5% and the CPI measures 2%, then the real rate of inflation is at least 7%.

I think in the shorter term innovation does influence inflation a little bit. Like the article stated, if a product is new and offers some uniqe benefit everybody will want to buy it and that will drive demand up. Like first automobiles, internet, cellphones. Probably not a huge influence but not negligible.

The demand of digital cameras is down with new iPhone. Someone buy one new thing and do not on other, this is inflation neutral.

Yeah. I was thinking more about some things that are completely new. My examples aren’t the best.

You'd have sent a tiny fraction of the messages you text now. Plus, you must include the hidden cost of all intermediate machines and infrastructure. I am not sure if it could end with a draw...

On only one interaction maybe you is correct. But not on 1B interactions.