12 votes
Accepted

Is an "arms race" between wages and inflation inevitable?

How true is the original assertion? The original assertion is poorly worded and not generally valid even if we ignore the wording. The assertion (at least a corrected version of it) can be true under ...
1muflon1's user avatar
  • 56.4k
5 votes

Is an "arms race" between wages and inflation inevitable?

Then a sizeable proportion of employers would need to do this to make a difference. If we take the statement literally that it's talking about just one employer, rather than the effect in general of ...
Acccumulation's user avatar
4 votes

Is an "arms race" between wages and inflation inevitable?

As the 1muflon1 answer states the best argument you are already making is that single employer committing to such policy does not matter. This would not necessarily be true if every employer would try ...
Leeh Mizrahi's user avatar
2 votes

If the interest rate is increased to limit inflation, doesn't that increase the money supply?

No it doesn’t. Bonds coupon rate (interest for bond) is not paid with newly created money but with pre existing money that already circulate in economy. Interest itself does not lead to money creation ...
1muflon1's user avatar
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2 votes
Accepted

What is the argument that suggests to the Federal Reserve that it is reasonable to cause a recession in order to prevent inflation?

First, it is not necessary for Fed to cause recession. Inflation is typically symptom that economy is operating above its sustainable capacity (natural level). Theoretically, if fed is careful with ...
1muflon1's user avatar
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2 votes
Accepted

Is Steve Forbes factually correct when he says that all of our economics problems are made worse by leaving the gold standard?

It is not controversial to state that inflation was lower under gold standard. Under gold standard quantity of money in economy is strictly limited by amount of gold, and money supply can only grow as ...
1muflon1's user avatar
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2 votes

Would it work? A tax that automatically toggles on-off

It is very difficult to say what the state of the economy is at at a given point in time so it is difficult to create conditions that would serve as an on/off switch for a certain tax. There are what ...
LlamaBricks's user avatar
2 votes

Why not increase tax instead of interest rate rises?

Taxes do not reduce inflation when government spends money they tax. Inflation dynamics can be described using Philip's curve: $$\pi_t = \pi^*_t +\beta(y_t-y_n) + \epsilon_t$$ where $\pi_t$ is ...
1muflon1's user avatar
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1 vote

What's the best measure of liquidity or money inside the market?

What's the best measure of liquidity ... inside the market? For liquidity there is theoretically no best measure. Based on context different measures can be considered best. Common measures that are ...
1muflon1's user avatar
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1 vote

Calculating annual inflation rates confusion

Most of the above mentioned methods are a right way to calculate some rate of inflation depending on context. They do not all calculate yearly rate of inflation. The first method I saw for ...
1muflon1's user avatar
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1 vote
Accepted

Have governments ever defaulted on its public domestic debt or treasury bonds?

Has there ever been a time when a government defaulted on its due to a country's economic state, such as hyperinflation, or for some national or international political issue? Yes, since default ...
1muflon1's user avatar
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1 vote
Accepted

If inflation rate drops, what happens to Feds Fund rate?

If you read the recent speeches by members of the Federal Open Markets Committee, which sets the target Fed funds rate, a majority seems to favor cutting rates once they are convinced that inflation ...
dm63's user avatar
  • 1,248
1 vote

Owner's rent or Rent?

"Owners’ equivalent rent of residences" is an notional amount representing how much rent would be charged for a residence (unfurnished and excluding utilities) if it were not being occupied ...
Henry's user avatar
  • 4,765
1 vote

Question on the nature of debasement

People could discover debasement by weighting the coin. In fact, for example, in Roman empire at the mint the the coins were minted by having a target weight and debasement was done by decrees that ...
1muflon1's user avatar
  • 56.4k
1 vote

What downside is there to making the USD the national currency for your country?

The most obvious reason is that any country that adopts the USD as its currency (called dollarization) loses control of its monetary and exchange rate policy. For example it is no longer possible to ...
dm63's user avatar
  • 1,248
1 vote

Would it work? A tax that automatically toggles on-off

Could we create a tax that automatically toggles on or off depending on the state of the economy taking into consideration that the revenues would be saved for further use, either to stimulate the ...
1muflon1's user avatar
  • 56.4k
1 vote

Could a single large retail chain by its own actions contribute significantly to inflation?

Technically prices of single chain could affect inflation, but practically that is extremely improbable (assuming we talk about consumer goods which seems to be implied, prices of base commodities ...
1muflon1's user avatar
  • 56.4k
1 vote

What is the argument that suggests to the Federal Reserve that it is reasonable to cause a recession in order to prevent inflation?

Higher inflation economies seem to have more absolute volatility in their inflation rate. This is confirmed if you look at the inflation rate graphs of Argentina and Turkey. Naturally absolute ...
H2ONaCl's user avatar
  • 943
1 vote

Why price always increase?

First, your statement is not factual and contradictory. Electronics are goods so both statements you make cannot be true. Price of goods and services do not always increase. There are many goods and ...
1muflon1's user avatar
  • 56.4k
1 vote

Why use Zillow data rather than just BLS rental data?

Why Zillow ? More timely. The BLS only releases rent data on a quarterly basis, while Zillow releases rent data on a monthly basis. This means that Zillow data can be used to track rent changes more ...
user1874594's user avatar
1 vote

When exactly did India change from using WPI to CPI for measuring Inflation?

India has been measuring inflation since the 1960s, but it wasn't until 2012 that the government started publishing data on ...
user1874594's user avatar
1 vote

Where did the money supply go?

The Fed began including savings deposits in M1 in May 2020. See Technical Q&As, specifically the items posted on 12/17/2020.
Daniel's user avatar
  • 294
1 vote

Change values from nominal to real in LM portion of ISLM?

Usually, $i$ is used to denote the nominal interest rate for the LM equation, so $\frac{M}{P}=L(Y,i)$ shows a relationship between real money supply $\left(\frac{M}{P}\right)$, real GDP $(Y)$, and ...
mynameparv's user avatar
1 vote
Accepted

Why does increase of national debt of the USA not lead to inflation?

Increase of national debt is increase of money supply. But why does increase of national debt of the USA not lead to inflation? The premise of your question is simply wrong. Increase of national debt ...
1muflon1's user avatar
  • 56.4k
1 vote

Why not increase tax instead of interest rate rises?

As suggested if taxes are increased governments are inclined to increase spending on such as health, lower income citizens, infractructure etc which could increase inflation and little accomplished. ...
Fred's user avatar
  • 11

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