is it inflation if money supply grows with prices but only 10% of the population gets the added money supply in the economy?
that's a inequality question, isn't it? nothing to do with inflation. Question a) is - are people actually better off in state with more wealth equality? maybe yes, maybe not. question b) and more importantly, will they be equally motivated in society with compensation equal to their effort and ability? think about it. the fact is most of us compare ourselves to billionaires and think we deserve more. but we all know few if not a lot, of peope, down the road who simply put, don't give a fuck. you probably earn more than them and have greater wealth, would it make sense for us to do all we can to make sure you get the same cut? do we want a disney land economy? maybe not. but then look at across the world, china, who are actually making things. the only serious problem with inequality is, if those with the money, don't create jobs with it. there is a lot of psychology involved too with risk taking environment. do you honestly think Tumblr is worth $1bill? of course not? the fact it's highly unlikely the founder will amass the money. he will most certainly start to employ more people or start a new venture, buy stuff with it etc. here is one advice, if you want to get wealthy quick, think of ways how you can employ people - this is key. if you can create jobs - no matter how - the system will help you. this is why banks get so much support. they hire in the hundreds of thousands (for mostly meaningless jobs actually) and more in related industries. but they create jobs. it seems people only have problem with it when the guys at the top earn what, 10-20 maybe $50mil? not worth it? look at google, facebook, amazon, no matter how silly the ideas, they create jobs. It's a human world, you gotta make it turn somehow.
its a serious question about inflation and how its figured out. i saw something that showed a figure most Americans are worse off still from the last crash and than there is a small percent that is almost 30% wealthier. does that have anything to do with inflation calculations? prices go up and money supply goes up but only lands in a few hands. i don't know if that's a dumb question but i would love an answer.
I don't think it's a inflation question. there always will be inflation. it's a equality of wealth issue. whether we have inflation or deflation it will effect all in a non-linear way - depending what balance assets/cash you hold, right? if a poor person has income of $100 a week he might spend 80% of that on food maybe 100%. a rich person who earns $4,000 a week will only spend about 2% of his income on food (the same $100). so when u have price of food going up it hurts the poor more as it's most of their consumption. the rich guy has rest of money in stocks or other assets. but how did all this happen in the first place, where u have a poor kid and rich kid? don't most people just born rich or poor? the ones that make the transition are extraordinary in their crowds. and it's also tricky channeling wealth to the poor. you can change income tax but still tricky. some of them don't even have a job or on low pay so it doesn't have an impact. unless the fed takes a helicopter out and throws out dollars, there remains only a few legals ways. Pushing up asset values is one way, but won't work if they don't own any. in the UK they're literally given cash to people from cancelling insurance policies. the underlying problems to much this is social structure. yes at the top I'm sure there are some seriously wealthy people who mgiht be greedy too etc. but at the bottom, you have lot of truly dumb people who are very high in the numbers. they don't really want a job, or maybe not smart enough or simply happy as they are with benefits. not everyone is striving to be rich. and not everyone gives a shit about the inequality - if they really did they'll be on the streets. the ones that do are few in the middle class - who are making transitions in wealth status. they have a lot to talk about because they see both sides of the coin, but most likely they just want better jobs or a pay rise.
you are getting to deep my question is if money is added in the economy but only in a few hands and prices move up is that put of the calculation? i am not poor and i was not born poor, i don't think poor people are dumb in large numbers either. i think motivation could be a problem but honestly if you can only make 8 bucks an hour how motivated will you be if you see people not working at your same level. you have to ask yourself is the pie being shared unfairly. i believe someone who works 50 hours a week and has a family should be able to have the basic things in life but that is not the case anymore. i wanted to answer you back but i really am more curious about the calculation.
again it depends. if the money is not spent then no there is no inflation. you can print and hand it to the top 5% all you want, but if they don't spend it on anything then there won't be inflation will there? actually i think this is what's happend recently. how odd, trillions spent and still fear of deflation. does that make sense? the distribution isn't really that important as the amount itself. if you gave 10million to just one person he'll probably buy a nice home. if you give him 10billion and he'll be in a position to influence house prices in the city if he buys 100 of them. if they spend it - say on property etc then prices will go up but most likely the poor guy will benefit somehow - that's the gamble behind the idea at least. the poor guy might be real estate agent or the plumber at the new house. so, i don't think how you distribute the pie matters too much for inflation, it's more about the general market environment. lot of psychology in it. you can hand the top 1% millions but if there is a crash they most likely will buy gold or a silly painting and no one benefits. if you distrubte the pie perfectly equally pie/population then you've achived nothing, just an extra zero at the end of everything. there is lot of philosophy in this and no one is really certain. look up the lorenz curve on equality.
piezoe I happen to have a 1964 2\nd edition of Funk and Wagnalls in my book case. It defines inflation as 1. The act of inflating or the state of being inflated. 2 An unstable rise in price levels due to an increase in currency and a mounting demand for goods. Great definition! My observation. I'm an old guy (87) so i am a bit old fashioned and do not like the changing language.In my school days the term due to always referred to a debt. Also a question. Is inflation always an unstable condition? If so the Fed has been doing a great job of contradicting this definition since 1913!
When Bernanke was asked if he was "printing" at a hearing awhile back, he said he wasn't. How could that be? I'm not sure I know the correct answer, but I am assuming it is because the traditional meaning of "printing" in economics is a little different than its meaning in the vernacular, i.e., as congressman, senators and you and I would be using that word. Though Bernanke was using the "correct" definition of printing, I am sure he understood what the Senator who asked that question meant. In the field of economics, to say that a nation is printing money, without qualifying, means that they are printing money to pay their bills and debts. That is to say they just print up some money and transfer it directly to their creditors. The key word here is "directly." What responsible nations do, however, is something quite different. For example, in QE the Fed buys, in the secondary market --not directly from the Treasury, debt obligations issued by the U.S. Treasury. The Fed uses newly created money to buy the Treasury's bonds. So in the QE operation new debt is associated with the newly created money. Obviously this is very different from simply printing money and using it to pay directly on your debts without creating new debt. I think that distinction must explain why Bernanke answered that he was not printing. I have been puzzled by that answer for a long time. But I think I understand it now. If I'm right, then Bernanke was also correct. He, in fact, was not printing. But his answer was certainly misleading.
best definition of printing was you need some money I go back in my bedroom and print it up and give it to you when you pay it back, we throw it in the fireplace and sit and have a brandy together