Saturday, March 10, 2012

What is the Real (Idiotic) Definition of Inflation?


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Perhaps there is no other effective government strategy to keep people from realizing the truth other than twisting the real definition of inflation.

The current definition of inflation so prevalent today is: rise in prices of goods and services (as caused by some economic factors, like money supply).

Interestingly, that's not the original definition. For a long time since the earliest definition of inflation, it was well accepted that the meaning is the increase in money supply, which results to rise in commodity prices and decrease in the purchasing power of money.

Proofs: 

  • In 1983, the Webster’s New Universal Unabridged Dictionary“provides the following meaning:
 “An increase in the amount of currency in circulation, resulting in a relatively sharp and sudden fall in its value and rise in prices: it may be caused by an increase in the volume of paper money issued or of gold mined, or a relative increase in expenditures as when the supply of goods fails to meet the demand."
However, in 2000, Webster (The American Heritage® Dictionary of the English Language, Fourth Edition, Copyright © 2000 ) had another definition of it:
Inflation:
2) A persistent increase in the level of consumer prices or a persistent decline in the purchasing power of money, caused by an increase in available currency and credit beyond the proportion of available goods and services.
Here is another one,
  • Webster’ American Dictionary of the English Language, in 1864 defined inflation as:
undue expansion or increase, from over-issue; — said of currency.
And like what had happened to the rest, the eleventh edition of Webster’ American Dictionary of the English defined inflation as:
a continuing rise in the general price level usually attributed to an increase in the volume of money and credit relative to available goods and service
Inflation was gradually changed from a term to mean increase in money supply (which causes high prices of goods and devalued money) into a rise in prices of goods and services (as an effect of the increase in money supply). Obviously, these are two different things. The former treats inflation as a  cause while the latter takes inflation as an effect. So, which is which?


The Reason Why. Whoah!
What's the motivation behind the re-definition of the term inflation-from increase in money supply to rise in prices of goods?

Perhaps the answer is that re-defining inflation is a critical ingredient  in this global fad of government-regulated economics. Pro-government economic theorists, the Keynesians, who vehemently pushed for government central banking and central economic planning, corrupted the previous understanding and poised to change the meaning of inflation forever. And the reason stated below can never be simpler than that.

Changing the meaning of inflation has only one apparent but low-profiled purpose. And it is for government  economic planners, mostly bankers, to keep hiding the fact that the culprit of almost all economic mess is the very same tool they use to "stimulate economic growth" - inflation of money supply. As long as they can maintain that the definition of inflation as mere rise in prices of goods, the blame would be deviated from the real cause of the problem.

Rise in prices of goods! That's the superstar definition of inflation today. People readily accept that idea. Oh yeah. That's the plan. All for the purpose of keeping an actively ignorant society, which I call a Monkey Society.


Sources:
https://mises.org/daily/2914
http://blogs.wsj.com/economics/2011/05/13/inflation-definitions-through-the-ages/
http://inflationdata.com/articles/2010/07/21/real-definition-inflation/
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