Inflated Thinking

I should have known better.

The last blog had an ending note about the "-1" inflation rate and I mused that this is bad sign as it signals deflation.

Greg called to point out that there can't be a true negative inflation rate as, by definition, the massive increase in money supply is "inflation." I fell into the sloppy-use trap and I should have known better.

Inflation is not the term for an increase in prices. Period.

Inflation will result in the appearance of an increase in prices because the money is worth less. So, over time, the term inflation has come to be used as "price increases," which is not correct. Thus, under this use, the -1% inflation means prices went down, which makes far more sense as people start saving.

For that matter, maybe it means there was a reduction of the inflation rate by 1%. So, in addition to being wrong-headed, it is not well defined. I took the numbers to mean something not intended.

This is definitional thing, not a political, so don't write to tell me otherwise. I will pay more attention to what effluvia I post. We must not permit the politicians, with the help of the ninny media, to twist reality to fit some private hope for reality.

We are routinely told, for example, that inflation caused gas to go up, say, 10%. If supply and demand did not change, then the dollar cost went up 10% because the dollar was accepted for 10% less by suppliers. There is no true value of the dollar, only what