Relay-Version: version B 2.10 5/3/83; site utzoo.UUCP
Posting-Version: version B 2.10.2 9/18/84; site topaz.ARPA
Path: utzoo!watmath!clyde!bonnie!akgua!whuxlm!harpo!decvax!linus!philabs!cmcl2!seismo!columbia!topaz!josh
From: josh@topaz.ARPA (J Storrs Hall)
Newsgroups: net.politics.theory
Subject: Re: The gold standard.
Message-ID: <654@topaz.ARPA>
Date: Fri, 15-Feb-85 12:53:26 EST
Article-I.D.: topaz.654
Posted: Fri Feb 15 12:53:26 1985
Date-Received: Mon, 18-Feb-85 05:49:31 EST
References: <613@ukma.UUCP> <> <1600@bmcg.UUCP> <237@tilt.FUN>
Organization: Rutgers Univ., New Brunswick, N.J.
Lines: 17

>> ...all inflation (overexpansion of the money supply) has been caused by
>> government.]
>
>...  Have you ever heard of
>supply shocks?  They cause inflation quite nicely by making necessary
>good(s) more scarce, hence more valuable, and thus lowering the purchasing
>power of the money in circulation thereby debasing the currency.  All
>without the government doing a thing.

A "supply shock" causes the price of one particular commodity to rise;
however it is not inflation (overexpansion of the money supply).  The
ill effects of inflation are primarily due to the economic miscalculation
induced by false cost signals generated, whereas the higher prices of
a given item when it is in short supply are exactly the accurate 
information the price system is supposed to supply.

--JoSH