Inflation: The Basics

Declining populations have quite a few things to be worried about, from an economic point of view. As population rates decline, the demographic profile starts to shift toward the grayer or older part of the spectrum, which puts an added burden on the ecomony:less input to pension and entitlement systems and more withdrawals, which will cause a shift to those still in the workforce paying higher premiums.Increased pressures on the healthcare system.Less creativity and adaptability within the workforce.decline in markets leading to less investments adversely affecting economic growth.Effectively lower savings rates. The above is by all means not a comprehensive list, and there can be argued that there are positive aspects to a declining population (Ex. A decrease in energy consumption) but I am not sure you could say that declining birthrates would have much impact on inflation rates.

Deflation is the last resort of a severly impacted economy. Mainstream economies will first resort to disinflationary policies. I can't believe that you are advocating a total restructuring of an economies currency, a la Zimbabwe, in order to correct an inflated system.You are totally out of your rockers here!Don't confuse disinflation with deflation!

You misunderstand. I was talking about the top marginal tax rate that was IN the 90 percentile range during one of the most properous eras after the end of ww2. I said nothing about the 1990's in that reply.In any case I answered your question, albeit with a question of my own. M just doesn't increase or decrease in a vacuum. Your caricature of an economy doesn't take into account rising or declining interest rates, productivity increases, debts, wage demands, and any number of significant impacts on a REAL economy. Jesus, how dense do you have to be to not get it? The inflationary pressure due to the amount of money in circulation is going to be mitigated by the fact that, you were entering a possible deflationary period, and/or the productivity gains due to increased demand and thus will lessen any inflationary pressures. You also have the role of government in controlling interest rates which can effectively add or take money out of the system. Ultimately, though an increase in the money supply can lead to inflation in the long run, it doesn't always because of the net effects of changes in supply, productivity, and government controls. In the broader economy. Where else? You are not accounting for the effect that inflation has on debts. No, the value of my dollars has not changed. I just gave you more because I valued your pencil greater than Jill did. The value of that dollar is not independent of its purchasing power. Just because I want to pay $135 for your pencil doesn't mean that my dollars are automatically worth less. That would be INSANE. It would only hold true if you couldn't buy more with the money than you could have with the lesser amount.Let's say you sell me your pencil today for $135, vice the $100 you were offered yesterday. Now you buy 45 gallons of gas for our RV instead of 33.3 gallons. Has your purchasing power increased or decreased?You're oversimplifying the real economy. It just doesn't work the way your proposing. As a medium of exchange, money has value. That is why our system works. If money had no value, you'd be seeing more people burning it to keep warm.I think your misapprehension is in failing to distinguish moneys inherent and its real value.Edited by DBlevins, : erased unnecessary snark.Edited by DBlevins, : No reason given.

In normal cases we do not want to see deflation. Deflation is a bad thing overall. Remember: Low rates of inflation are good. High rates of inflation are bad. Edited by DBlevins, : No reason given.