Didn't know about hedonics but just googled some basic info. All I can say is: that is disgusting! Is there anything that can't be corrupted by politics???? Yes, the more I think about it the more I agree with you. I think of a number of basic items that have gone up significantly in the last few years. But then why the big concern over deflation? Was that just a ruse? Or was that just certain sectors? It seems like our economy is fragmenting...
True, but it's still up 5% over the same time last year: http://www.economagic.com/em-cgi/data.exe/fedstl/m2sl Am I wrong or isn't that one heck of a lot of new cash floating around in just twelve months time? Plus, I still don't see where this new money is being created...
Can you explain a little more? Are you saying that the business sector is simply able to absorb this extra cash w/o increasing prices significantly somehow?
Please don't take this as an arrogant post, but.... The only way you're going to understand this is if you get a good textbook get a refresher in economics. The question (like most economic questions) has many variables other than the simple money supply. Take a look at the IS-LM model, which deals with the equalibrium between financial markets and goods markets. The interaction between the LM (money stock) and IS (government actions, among other things), as well as balance of payments creates the output and interest rate levels. In addition, typically (nominal) interest rates track inflation. High rates equal high inflation and low rates mean low inflation. I honestly don't know it well enough to really explain it adequately as it is a very confusing subject. But I recommend you take a look at a college-level macroeconomic theory book over the holidays. I wish I could help more than simply telling you to go read about it, but it's the best way to keep from confusing you more. Also, try these websites: http://research.stlouisfed.org/index.html http://www.economicswebinstitute.org/essays/is-lm2.htm
Repost: Productivity is the reason In 1787, String Quintet in G Minor by Mozart required five people to perform it. It still does. Also still takes just as long for college professor to grade papers, give lectures and educate your kid. Same amount of time to fix radiator hose. So you pay through nose for cost of labor. Or more for the same thing while in places in the economy where productivity rages, you pay less for more. Called "Baumol's cost-disease" and is endemic to labor intensive business. Search google for more if interested. I took everything above from the July 7 New Yorker in The Financial Page. Geo.
I appreciate you comment - don't take it as "arrogant". I mean that's why you can get a PhD in economics - the economy is very intricate and often subjective. And I will read more about it. But, that said, I still find it hard to believe that there aren't straightforward and relatively short answers to my questions. For example, I find it hard to believe that the economy is any more complex than the markets or certain sciences and those you can generally answer questions so that a layman can understand it relatively painlessly. But maybe you're right...maybe I have to take a whole course...
If you're using this as an explanation for why some sectors experience inflation and some increase in quality and even deflate, that makes a lot of sense. But if you're saying that productivity can account for the growth in money supply, I find that hard to believe. For example, I can't believe our productivity has gone up 5% in the last year to "legitimize" the increase in money supply...
There's an old joke: If you're attending a class in Economics and you understand the professor, you're not listening. Good luck trying to comprehend Economics as a science, but if you're going to make the attempt - start with chaos theory.
Unfortunately, I think he's right. You can get a BS in economics, but economics is less scientific than Underwater Basket Weaving. In (macro)economics there is a lack of causality. If you ask five economists "What are the long term effects of a weak dollar" odds are you're gonna get five different answers and reasonings, even to a relatively easy question like that. Unfortunately your question is harder. I apologize for posting twice and saying nothing, but there really isn't a straight-forward answer to your questions that I know of. As an added bonus, the more you study economics, the more confused most get. Getting a straight answer out of an economist is as hard as getting one from a politician. I don't know if you can access this without subscribing, but it is a free subscription and I don't get much crap mail from it, so it may be worth it. If you subscribe, take a look at Kellner's other articles. He wrote one about a month ago addressing the same subject. http://cbs.marketwatch.com/news/economy/default.asp?siteid=mktw Click on Irwin Kellner's article. Also, check out his Nov. 18th article on a possible liquidity trap (link is in the above article).