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From: mmt@dciem.UUCP (Martin Taylor)
Newsgroups: net.politics.theory
Subject: Re: The gold standard.
Message-ID: <1418@dciem.UUCP>
Date: Sat, 23-Feb-85 21:41:47 EST
Article-I.D.: dciem.1418
Posted: Sat Feb 23 21:41:47 1985
Date-Received: Sat, 23-Feb-85 22:18:55 EST
References: <613@ukma.UUCP> <> <1600@bmcg.UUCP> <237@tilt.FUN> <topaz.654>
Reply-To: mmt@dciem.UUCP (Martin Taylor)
Organization: D.C.I.E.M., Toronto, Canada
Lines: 21
Summary: 


>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
For once, JoSH is unwittingly right.  Uncertainty IS the main cause of
inflation, and the "false cost signals" augment that uncertainty.
Over a 2000-year history, inflation has averaged around 4%, which may
be some kind of optimum.  Prices cannot supply accurate information
when they are changing, simply because the information does not apply
to the present. Whether inflation IS the "overexpansion of the money
supply" or whether that is a result of inflation is not relevant.
-- 

Martin Taylor
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