> as "inflation doesn't cause inflation" since it meant any expansion of the money supply.

Since 1950's, population has doubled and GDP is up 10x.

What should money supply be for it to cause zero inflation? 1x? 2x? 10x?

I don't know, but I do strongly believe that the "conventional wisdom" that deflation is a horrible phenomenon that leads to a decades-long depression is bullshit. The entire process of industrialization was hugely deflationary Yet still the 1800s were the first time in history where quality of life for the average Joe improved by leaps and bounds. Diet, medicine, child mortality, wealth all started improving exponentially.

Meanwhile under the monetary alchemists and "stabilizing" regime of central banks real wages have stagnated, crises still occur every 10 years and the entire system is so fragile that one major event could collapse the whole house of cards.

>The entire process of industrialization was hugely deflationary

Prices definitely lowered, but the difference being that while there was also supplier upheaval as artisan/bespoke producers were replaced by mass production - the industrialists were enormously and sustainably profitable and could in turn employ those displaced from the failed producers.

Aggregate demand arguably increased with the move of labour from rural agriculture to urban manufacturing.

A deflationary cycle annihilates demand by definition and fixed costs then eat producers alive - leading to wealth destruction, unemployment, debt writeoffs and credit tightening. Which in turn leads to more demand annihilation.

Thank you for this.

The ill-defined nature of inflation is an extremely important and often overlooked fact.

Another interesting problem with the concept of inflation:

Thirty years ago, what would've been the "consumer price" of a modern smartphone? Millions, easily.

Same goes for many other technologies that have fallen in price rapidly. (Big screen TVs, speakers, computers, anything with a screen, a CPU or a wireless communication chip really.)

Is this deflation?

> Thirty years ago, what would've been the "consumer price" of a modern smartphone? Millions, easily.

Sure, but how many of them were there? Zero. Volume has to be accounted for.

But how are you going to compare prices between two periods if you don't include the same items in the "market basket"?

By comparing median total living costs to reflect what's typical. A cell phone and computer are indispensable today, a land line not so much, for instance.

With that definition, won't you conflate inflation with changes to income distribution and economic growth?

Having a 2% inflation target would in practice mean having a target for median living cost increase.

> If you look at real estate prices vs CPI since MMT really began, real estate grew much faster than CPI, in some cities over twice as fast. That is a direct result of all the excess money that wasn't needed for productive endeavours finding a "safe" place to be parked.

Seems like a post hoc ergo proctor hoc fallacy. There are plenty of safe investments that could also be productive, that doesn't say anything about why real estate specifically.

The definition of inflation is a general increase in prices, not cherry picked item price increases.