[arcticbull]

Only the long-debunked Austrian school defines inflation as a function of supply alone. The rest of the world moved on to defining inflation in terms of the measured, real-world change in the purchasing power of money - which comes under pressure from a number of different factors that aren't captured by supply.

For instance, supply chain disruptions making basic goods more expensive and increasing competition for them. Or, zoning policy prohibiting construction of new housing sufficient to meet demand in high-growth metro areas raising the cost of housing. Or zoning policies in suburban areas making housing 2x bigger on average now than in the 1970s. [1]

Defining inflation as a function of supply distracts us from the real-world problems causing broad-based increases in price.

[1] https://fee.org/articles/new-homes-today-have-twice-the-squa...

[mr_spothawk]

> long-debunked

lol.

> Defining inflation as a function of supply distracts us from the real-world problems causing broad-based increases in price.

price is a function of supply and demand already. you don't need to redefine inflation unless you're trying to dupe feeble-minded rubes.

[arcticbull]

Purchasing power is a function of a whole ton of things, including supply chains. If goods require more inputs or are less efficient to produce that will increase their price. This in turn decreases the relative purchasing power of a dollar. This can happen due to all sorts of externalities, for instance a tax. Or it can go down due to efficiencies in manufacturing technology or biotech. Or, a massive global pandemic leading to supply chain disruptions can cause prices to go up. Or housing can become more expensive because of zoning rules.

The "supply of currency units" is a fundamentally inadequate measure to capture this. It is too simplistic. Nobody takes it seriously except for a small group of very vocal online crackpots because it is so obviously unfit for purpose. [1]

We re-defined it as our understanding grew. The way we update practically any model in the face of new evidence.

Japan single-handedly demolishes the Austrian model. Their M2 supply grew 3X from 1990 to present but inflation remained 0% measured over thirty two years. Prices did not change from 1990 to 2022. [2, 3]

[1] https://www.pragcap.com/understanding-why-austrian-economics...

[2] https://fred.stlouisfed.org/series/JPNCPIALLMINMEI

[3] https://tradingeconomics.com/japan/money-supply-m2

[mr_spothawk]

> This in turn decreases the relative purchasing power of a dollar.

you're again conflating price and monetary inflation. and again mixing in somebody else's prejoratives to flavor your discussion of their topics.

here's a link [1]

[1] https://mises.org/library/inflation

[arcticbull]

No, I'm not. The idea that supply increase is inflation is a rejected Austrian economics concept with no basis in reality.

[mr_spothawk]

Yes you are. Watch how i can simplify it for you...

> The idea that inflation is anything other than an increase in the supply of money is an intentionally confounding theoretical device with no basis in reality.

[arcticbull]

I mean it's straight-up wrong. The M2 supply in Japan tripled since 1990 and prices remained the same. Therefore your model is incomplete.

If you have 1 burger that you'd pay $10 for, and someone makes a second burger, does that make each one worth $5? No, of course not.