tag:blogger.com,1999:blog-6245381193993153721.post8748998327557343484..comments2024-03-17T00:23:24.896-07:00Comments on Social Democracy for the 21st Century: A Realist Alternative to the Modern Left: The Original Economic Use of the Word “Inflation”?Lord Keyneshttp://www.blogger.com/profile/06556863604205200159noreply@blogger.comBlogger12125tag:blogger.com,1999:blog-6245381193993153721.post-40857507618324255682014-08-04T22:42:53.698-07:002014-08-04T22:42:53.698-07:00I am not sure the paper is really by an Austrian, ...I am not sure the paper is really by an Austrian, but, yes, it is wrong.Lord Keyneshttps://www.blogger.com/profile/06556863604205200159noreply@blogger.comtag:blogger.com,1999:blog-6245381193993153721.post-5297679486320400582014-08-04T19:57:32.003-07:002014-08-04T19:57:32.003-07:00Interesting that all of these occurrences seem to ...Interesting that all of these occurrences seem to come from a few years after 1819. Daniel Walker Howe's What Hath God Wrought (limited to American history, admittedly) identifies the downturn that year as the first cyclical downturn that the public had experienced, with no obvious cause from food shortages, war, and so on. I would wager the same was true in England. I wonder if the Dutch or French coined words for inflation following their earlier experiences with speculative manias.Anonymousnoreply@blogger.comtag:blogger.com,1999:blog-6245381193993153721.post-124575686813956722014-08-04T18:42:18.847-07:002014-08-04T18:42:18.847-07:00I had believed this paper: On the Origin and Evolu...I had believed this paper: <a href="http://www.clevelandfed.org/research/commentary/1997/1015.pdf?origin=publication_detail" rel="nofollow">On the Origin and Evolution<br />of the Word Inflation</a>, still the only one I can find on the topic, but your discoveries seem to disprove his and the Austrian contentions.Calgacushttps://www.blogger.com/profile/06031818010224747000noreply@blogger.comtag:blogger.com,1999:blog-6245381193993153721.post-6346758034829997102014-08-04T07:11:18.469-07:002014-08-04T07:11:18.469-07:00inflation of money or 'monetary inflation'...inflation of money or 'monetary inflation' seems to have always referred to 'excessive' issue of money... with excessive meaning leading to a fall in the value of money, i.e. a rise in prices.Philippenoreply@blogger.comtag:blogger.com,1999:blog-6245381193993153721.post-10084862951822070422014-08-04T07:08:06.768-07:002014-08-04T07:08:06.768-07:00I'm taking a break from that madhouse for the ...I'm taking a break from that madhouse for the time being.Philippenoreply@blogger.comtag:blogger.com,1999:blog-6245381193993153721.post-47775069177309299902014-08-04T07:03:04.656-07:002014-08-04T07:03:04.656-07:00Yes, that doesn't read like 1802 English to me...Yes, that doesn't read like 1802 English to me!Lord Keyneshttps://www.blogger.com/profile/06556863604205200159noreply@blogger.comtag:blogger.com,1999:blog-6245381193993153721.post-14705170690030616932014-08-04T06:56:09.026-07:002014-08-04T06:56:09.026-07:00Yes, I should have also mentioned that the use of ...Yes, I should have also mentioned that the use of "inflation" in the sense of monetary/currency/credit inflation also appears in the early 19th century, and alongside the use in the sense of inflation in relation to prices. Both are regular uses in the 19th century.<br /><br />But the question is: what was the first occurrence of its use in an economic sense? <br /><br />The 1821 use in Say is the earliest I can find.Lord Keyneshttps://www.blogger.com/profile/06556863604205200159noreply@blogger.comtag:blogger.com,1999:blog-6245381193993153721.post-80696619990227121952014-08-04T06:54:28.528-07:002014-08-04T06:54:28.528-07:00I should also say, the best way to get at this is ...I should also say, the best way to get at this is to find the etymology of the word. What I mean by that is to figure out where the metaphor was taken from. The online etymological dictionary indicates that the origin was medical.<br /><br />http://www.etymonline.com/index.php?term=inflation&allowed_in_frame=0<br /><br />I would imagine that late 18th century chemistry and physics experiments probably gave a new meaning to the word which then transferred into economic discourse.<br /><br />According to my Chamber etymological dictionary it was first recorded in the US in a speech by this guy in 1838:<br /><br />http://en.wikipedia.org/wiki/Daniel_D._BarnardPhilip Pilkingtonhttp://fixingtheeconomists.wordpress.com/noreply@blogger.comtag:blogger.com,1999:blog-6245381193993153721.post-90880443768488065842014-08-04T06:46:29.821-07:002014-08-04T06:46:29.821-07:00Hmm... Some very brief research confirms that this...Hmm... Some very brief research confirms that this term does seems to have appeared in the early-19th century. I have found an interesting use of it by Thomas Tooke whereby he is discussing financial speculation through the over-expansion of speculative credit:<br /><br />"The rise of prices in 1835-6 was mainly the conse- <br />quence of an extraordinary demand, arising from a <br />spirit of speculation which had its origin in America, <br />and to which an infatuated confidence of the houses <br />here in that trade, ministered by unbounded credits. <br />A collapse of credit, as the ultimate result of such <br />a previous inflation of it, is so obviously an inevitable <br />necessity, as to supersede any call for explanation."<br /><br />https://archive.org/stream/inquiryintocurre00tookuoft/inquiryintocurre00tookuoft_djvu.txt<br /><br />This is from 1844.Philip Pilkingtonhttp://fixingtheeconomists.wordpress.com/noreply@blogger.comtag:blogger.com,1999:blog-6245381193993153721.post-90676848735706858762014-08-04T05:50:32.087-07:002014-08-04T05:50:32.087-07:00On an unrelated note, it is interesting to see how...On an unrelated note, it is interesting to see how Ken B's return at Free Advice has provoked the most absurd responses from Murphy and co.Lord Keyneshttps://www.blogger.com/profile/06556863604205200159noreply@blogger.comtag:blogger.com,1999:blog-6245381193993153721.post-13257279098534145812014-08-04T05:48:58.077-07:002014-08-04T05:48:58.077-07:00Yes, as you rightly say, a lot of the modern Austr...Yes, as you rightly say, a lot of the modern Austrians have lost Mises' more subtle definition of inflation:<br /><br /><i>“Inflation is an increase in the quantity of money <b>without a corresponding increase in the demand for money, i.e., for cash holdings.”</b></i><br />http://www.fee.org/publications/detail/the-free-market-and-its-enemies#axzz2mXfFRfH7<br />--------------<br />At least Mises gave some thought to the demand to hold money.<br /><br />If Austrians in 2008 and afterwards, even with their simplistic models, had given some thought to how the banks wanted to hold most of their new money reserves at the Fed because of uncertainty and bad balance sheets, the Austrians wouldn't have been so quick to make their disastrous predictions of hyperinflation. <br /><br />Of course, if they had learned about the widespread existence of mark-up prices, endogenous money, and dispensed with the money multiplier myth too, this would have helped too!Lord Keyneshttps://www.blogger.com/profile/06556863604205200159noreply@blogger.comtag:blogger.com,1999:blog-6245381193993153721.post-4071413380383648772014-08-04T05:31:40.729-07:002014-08-04T05:31:40.729-07:00"the earliest examples of “inflation” and “in..."the earliest examples of “inflation” and “inflated” seem to refer to prices, not money supply or currency inflation"<br /><br />As I pointed out, it's only an <i>excessive</i> increase in the money supply (supply greater than demand) that would be considered to be 'inflation' by von Mises. This means you can only really know if inflation has occurred, according to Mises, if prices rise. Until they rise, you would just be speculating or guessing that an observed increase in the supply of money would be 'inflationary'.<br /><br />Mises often asserted that increases in the money supply would be excessive and thus inevitably raise prices, which led him to assert that substantial increases in the money supply were themselves 'inflation'. This, combined with Mises occasional vagueness and his tendency to exaggerate and simplify for rhetorical effect (so as to push his political agenda more forcefully) has generated a lot of confusion among fans of 'austrian economics'. Philippenoreply@blogger.com