Quote from: benzone on January 15, 2014, 05:49:01 PM

1. Company X invents a new product, new sgement and all other prices of unrelated products will fall at once so X can make more money? Yea right, dream on. Most prices are rigid.
2. If you read anything in those 20 years, please post a link where we can find your fabricated definition of inflation. Wikipedia - no, Investopedia - no, any economics scholbook - no ...

Hello, the answer to point 2 is contained within the answer for point 1

1. The economy is something of a feedback loop, so while you're correct that prices are sticky/rigid, this is a time-sensitive scenario. It takes time for actors to adjust to new realities, and some times, they refuse to do so - but that's their own problem.

2. Inflation is an increase in the money supply relative to the goods and services it is chasing; so, ceteris paribus, this would lead to an increase in prices. But like I said above, the economy is a bit of a feedback loop, and signals take, again, time to move into all sectors. And some sectors are more sensitive to inflation that others: the stock market is going up at unprecedented levels right now, the housing market is 'recovering' etc etc.

ascalon

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