| >>"> The term inflation was initially used to describe a change in the proportion of currency in circulation relative to the amount of precious metal that constituted a nation’s money." That definition of inflation makes no sense in the current monetary arrangements, it's, simply, not how it works anymore. There is not an "amount of precious metal that constituted a nation’s money." If some people don't understand that, we should aim to educate them. >>"Keynesian economists changed the word to suite the needs of Keynesian theories." Whatever the historical meaning of a word, inflation means something very clear now From https://en.wikipedia.org/wiki/Inflation: "In economics, inflation (or less frequently, price inflation) is a general rise in the price level in an economy over a period of time, resulting in a sustained drop in the purchasing power of money." You can't just revert the meaning because it suite your needs, and expect everybody agree. Whatever your feelings about it, that it what it means now. |
To be clear, what you are referring to is a quote from the FED article I linked to and quoted. Before the Keynesian revolution, inflation meant increased money supply and was assumed to increase prices as well, because money was backed by or was gold/silver. Many people as you opined have a misunderstanding that money is still backed by gold and you are correct that they lack the education. The "change" in the definition was by the Keynesians. It is not accepted by everyone. The monetary theory change should not change the definition.
Why does my definition make sense to me? A price is a number, not a physical thing so it increases. Take the balloon analogy. Money supply is the balloon, inflated with dollars. Price is the balloon, inflated with numbers? Does not make sense to me. The term "price inflation" is a misnomer. It should be "price increase".
FYI: On this site we use "> " for block quotes. You used quotes and ">>" and included my ">". It was a little confusing.