Talk:Inflation/Archive 3

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Lead

Wikipedia's guideline on lead sections says: The lead section should briefly summarize the most important points covered in an article in such a way that it can stand on its own as a concise version of the article. Current version fails to do that. -- Vision Thing -- 09:19, 7 September 2008 (UTC)

What do you think is missing?--Gregalton (talk) 09:25, 7 September 2008 (UTC)

Are you kidding? What is missing is any mention of other explanations and definitions of inflation. -- Vision Thing -- 09:57, 7 September 2008 (UTC)

Very first sentence - before the lead - reads "For increases in the money supply or debasement of the currency, see monetary inflation." That is a different definition. The lead directly and prominently indicates that changes in the money supply are generally agreed to lead to high inflation. So could you be more specific?--Gregalton (talk) 10:01, 7 September 2008 (UTC)

Lead should be "a concise version of the article". This article has sections on Austrian and other views on inflation that are not summarized in the lead section. -- Vision Thing -- 10:05, 7 September 2008 (UTC)

Insufficient reading of wp:lead, which also states "The emphasis given to material in the lead should roughly reflect its importance to the topic according to reliable, published sources." Wealth of mainstream economic literature rarely, if ever, refers to Austrian views. You may be correct in that the article has too much info on Austrian views, however.--Gregalton (talk) 10:08, 7 September 2008 (UTC)

Of course, we should first determine what are today's mainstream views on inflation. In doing so I believe that we will find that Keynesian view is overrepresented in this article. -- Vision Thing -- 10:46, 7 September 2008 (UTC)

For what mainstream views are, and what it is appropriate in an article, I think we can refer to WP:SOURCES. The preferred hierachy of sourcers are:

1. Peer-reviewed journals and books published in university presses
2. University-level textbooks
3. Magazines, journals, and books published by respected publishing houses
4. Mainstream newspapers

Special note should be made of WP:SPS, in general self-published sources are not acceptable, except when used as sources about themselves. Since 'Austrian' economists are seldom, if ever, published by anyone other than their own organization, almost all related documents are 'self-published'. This makes their writings unreliable sources about anything apart as a source for describing what 'Austrian' economists are and what they say. lk (talk) 11:01, 7 September 2008 (UTC)

I would also note that the use of the term "Keynesian" in this article is excessive, and seems to be used with some pejorative connotations, for concepts and arguments that are central to virtually all of mainstream economics. So, the term Keynesian may be over-used, but not necessarily the concepts.

Of course, I can find Keynes and Keynesian in almost any economics textbook, but rarely (if ever) Austrian sources or concepts.--Gregalton (talk) 11:18, 7 September 2008 (UTC)

Lawrencekhoo, it seems that you have misconception about importance and influence of Austrian school. They are not completely inside a mainstream but they are also not so fringe as you are trying to describe them. -- Vision Thing -- 12:18, 7 September 2008 (UTC)

That should be judged on the basis of each relevant part. As for how it relates to this article, one editor claims that the Austrian definition of inflation is different. Which is okay as far as it goes, but if so, their comments on monetary inflation have little to do with price inflation. It has been quite clearly established that the definition of inflation as used by almost everyone coincides with price inflation. Apart from being a semantic argument, it's an attempt to promote a specific, non-mainstream point of view in an article that is not about Austrian economics.

For analogy, it makes me think of the argument over abiogenic petroleum origin: the article on petroleum limits discussion of the abiogenic theory to essentially one paragraph, because it is most decidedly not the consensus, accepted view on the issue. That theory is rightly discussed in detail on the page dedicated to the theory.--Gregalton (talk) 12:38, 7 September 2008 (UTC)

Gregalton

Price inflation and monetary inflation are two very different things, on that we can agree. Also, none of them are synonym with inflation. Someone suggested that inflation should be disambiguated into the various forms of inflation, such as price and monetary. The origins could be left in the inflation article, with reference to the current dispute of the definition. Thus, everyone would first see what inflation originally meant and the be able to move on to the more current articles. This would illustrate the outspread and ongoing debate. And as Vision Thing already noted, not even the mainstreamers agree. Not even all Keynesians agree, not to mention the monetarists and neoclassisists.

This is an encyclopedia and it should give truthful information, not politically angled information. —Preceding unsigned comment added by Misessus (talk • contribs) 17:11, 8 September 2008 (UTC)

I agree that they are two different concepts, but in fact the references and sources clearly demonstrate that price inflation is the meaning commonly assigned to inflation at present. That is not in dispute. The article also disambiguates the two meanings before even the lead. I don't know what you're claiming mainstreamers disagree on, but the basic definition is increase in the general price level. You seem to be the only one claiming that this is politically "angled."--Gregalton (talk) 08:45, 9 September 2008 (UTC)

If you read the article, you get the idea that there's as much consensus of inflation meaning increased money supply as normal price inflation. And still, the claim was not sourced, which again isn't that surprising, because there really doesn't seem to be any, which is also the picture you get when you read the article.

As for politically angled. When people explicitly state that a certain view should be promoted, and that view is the one favoured by the political class, the article becomes politically angled. Reading through the talk page, you'll find that I'm far from the only one who thinks this article has been subject to severe bias. The problem is that you've had most of the others blocked or removed from WP. Speaking of political angle...

Misessus (talk) 20:54, 9 September 2008 (UTC)

Dispute Flag

Vision Thing has added a dispute flag. I'd be grateful if you could clarify which points you believe are disputed.--Gregalton (talk) 13:48, 7 September 2008 (UTC)

Don't you argue that this article gives undue weight to the Austrian school? -- Vision Thing -- 16:17, 8 September 2008 (UTC)

It certainly was a problem. This WP:FRINGE group got a run in just about every section of the article. I've made some changes in line with WP:WEIGHT.JQ (talk) 21:04, 8 September 2008 (UTC)

The Austrian school is not a fringe school by Wikipedia's policies. I think it would best to centralize this discussion at WikiProject Economics. -- Vision Thing -- 07:54, 9 September 2008 (UTC)

Thanks for clarifying what the flag was for.--Gregalton (talk) 08:48, 9 September 2008 (UTC)

JQ made some changes to weight as noted above. Has the issue been sufficiently addressed to remove the POV tag, or are there additional issues? If there are additional issues, please point to specific issues that are actionable within the content policies so others can address the issue. Thanks Morphh ^(talk) 15:06, 09 September 2008 (UTC)

Revising the article

I rewrote portions of the 'Effects of Inflation' sections. I also took out this lengthy portion (which I'm putting here for now):

"Many prices are "sticky downward" and tend to creep upward, so that efforts to attain a zero inflation rate (a constant price level) punish other sectors with falling prices, profits, and employment. Efforts to attain complete price stability can also lead to deflation, which is generally viewed as negative because of the downward adjustments in wages and output that are associated with it. In addition, if deflation means that goods are likely to be less expensive in monetary terms in future (that is, the value of the currency unit is rising), consumers have an incentive to delay purchases, which will in turn contribute to further reduction in the economy, potentially resulting in a liquidity trap. In contrast, with high inflation, consumers have the incentive to spend money as soon as possible, contributing further to inflation. In technical terms, high inflation may increase the velocity of money, while deflation can lower it, in each case impacting inflation more than the underlying changes in the money supply. Hence, moderate levels of inflation are generally considered less harmful than either high inflation or deflation.

With inflation, the price of any given good is likely to increase over time, therefore both consumers and businesses may choose to make purchases sooner rather than later. This effect tends to keep an economy active in the short term by encouraging spending and borrowing, and in the long term by encouraging investments. But inflation can also reduce incentives to save, so the effect on gross capital formation in the long run is ambiguous.

Inflation is also viewed as a hidden risk pressure that provides an incentive for those with savings to invest them, rather than have the purchasing power of those savings erode through inflation. "

My reason for doing so is that I do not want the article to be too long. Hence in the 'Effects of Inflation' section I opted mostly a bulleted list. Some of the above is already covered in that list. Some of that which is not I plan on adding in shortly. Any comments and suggestions are welcome.radek (talk) 22:39, 7 September 2008 (UTC)

The lead and the article in general

LK

Firstly, the term mainstream economics has been used for decades by all schools of economic thought. This talk page alone is littered with the expression and it is also used throughout Wikipedia.

Secondly, as noted not even the Keynesians agree on the defintion of inflation. The whole reason for there even being a debate is that there are so many conflicting views on what inflation is, what causes it, what effects does it have and how can it be controlled.

Of all the amazing things you've claimed and said thus far, these two definately take the prize.

Misessus (talk) 19:34, 8 September 2008 (UTC)

You make a strong claim there, please back it up with at least one citation from a peer-reviewed journal article or an economics textbook. As far as I know, undergraduate text books (of which I own several, free desk copies ;-)) all agree on the definition of inflation, and also about the long run causes. There is no dispute (except with 'Austrians'). lk (talk) 19:50, 8 September 2008 (UTC)

Of course the term 'mainstream economics' is well established. My point about the lead is that it is inappropriate in wikipedia articles to preface the name of the science with 'mainstream'. Eg, in the article about General relativity, physics is not prefaced 'mainstream physics'; in Evolution biology is not refered to as 'mainstream biology'. The terms exist, but it is inappropriate to use them in the lead. lk (talk) 19:57, 8 September 2008 (UTC)

The debate started when the some mainstream economists started to redefine various terms within the field of economics. As the lead stated before (and again somewhat oversimplified), keynesians and monetarists disagreed and still disagree on what inflation really is. The neoclassisists, who for some reason are completely ignored on this article, also offered their own view.

As for the undergraduate books. Yes, I've read different definitions in those as well. Then again, I've read undergraduate books and peer reviewed articles stating that the cartels in the late 19th century was responsible for lowering production and thus increasing prices in industries such as steel, oil, salt and other major industries. This "fact" led up to the Sherman Act of 1890. However, statistics show that the level of production in the 17 industries which were claimed to be cartel controlled, in fact had risen by many times the national average, and that the price had halved in some of them. That truth is not told in any textbook, of course.

I've also read books claiming that the New Deal and WWII lifted America out of the Great Depression, that Andrew Jackson was the forerunner of the New Deal policies and that slavery was the cause of the American Civil War. So you'll excuse me for not putting too much faith in the alleged textbooks on your desk.

As for the mainstream term. Physics and biology are hardly comparable, as the term "mainstream physics" is hardly as established as mainstream economics, if established at all. That is another difference between natural sciences and social sciences. In the former, you have to be able to prove you're right, and it is much easier to do so since empirical evidence is both possible and widely accepted. In the latter, all you need to do is to make friends with politicians. Your theories can be complete bollocks, such as Keynesianism and Marxism, but if you're well connected, that is what will be taught in the universities and what the economic policies will be based on. Tragic yes, but all too true.

Misessus (talk) 20:14, 8 September 2008 (UTC)

Anyone can claim anything. Citations, or it didn't happen. lk (talk) 20:35, 8 September 2008 (UTC)

Yes, you've proven to be quite capable of making extraordinary claims without citing them.

Within the economic profession, there has been an ongoing debate on inflation, competetion, anti-trust, eminent domain, externalities and several other subjects. As far as general consensus goes, it is actually quite rare in any social science, especially when compared to the natural sciences.

And as far as citations go, you didn't source your claim either. And how could you, how could anyone prove a "general consenus" on a topic that is so eagerly debated?

Misessus (talk) 20:42, 8 September 2008 (UTC)

Edit War

And the constant stream of incredible claims keep on flowing.

LK, you're accusing me of edit warring. Pray tell, what do you call what you've been doing on this page? Completely arbitrary edits, knowing full well they don't hold and that I will reverse them, only to scream three revert rule. Just how low are you going here?

Misessus (talk) 20:38, 8 September 2008 (UTC)

Monetary inflation

The article Monetary inflation appears to be a straightforward POV Fork of this one. It should be deleted or merged in here.JQ (talk) 22:05, 8 September 2008 (UTC)

Leaving aside any POV issues, my understanding is that monetary inflation is a quite separate thing and probably does not belong here. While the money supply affects prices it is possible for each to inflate or deflate separately. Merging here would only add to the misconception that there is only one sort of inflation and that there is disagreement as to what its true nature is, when almost everybody accepts that there are two different phenomena here, both of which are meaningful and valid.

If it should be merged anywhere, monetary inflation would seem to belong in Money supply.

As an aside, in the UK at least, it is most common to describe monetary inflation/deflation as "expansion" or "contraction" of the money supply rather than inflation or deflation, although both terminologies can be used and understood.

--DanielRigal (talk) 22:39, 8 September 2008 (UTC)

It is generally accepted that if asked what the inflation rate was in a particular year in the past in a particular country, we will be given one number: the CPI rate for that year for that country.

TaGR (talk) 23:14, 8 September 2008 (UTC)

What is a Fork?

TaGR (talk) 23:26, 8 September 2008 (UTC)

I would prefer to keep the monetary inflation article (which is, credibly, a separate concept) but reduce the fork-ish aspects and hold it to a far higher standard.--Gregalton (talk) 02:02, 9 September 2008 (UTC)

TaGR: see wp:POVFORK.--Gregalton (talk) 02:03, 9 September 2008 (UTC)

I've gone and edited the other article, mainly removing more repetition of the Austrian theory. There isn't a whole lot left after that.

You were quite right, JQ, the article was basically a POV fork. I still would prefer to keep it separate, however.--Gregalton (talk) 02:14, 9 September 2008 (UTC)

OK, that's a huge improvement and there's enough for a separate article, even if a bit stubby. I've removed the tagsJQ (talk) 05:10, 9 September 2008 (UTC)

Reverted wholesale by visionthing including tags. Grateful another editor takes a look at monetary inflation, which, in its current state, is just a povfork.--Gregalton (talk) 08:47, 9 September 2008 (UTC)

References

Does anyone have some reliable books we could use to generically use as a reference for a bit of the non-footnoted content in the article. If so, please create a Reference section under Notes, and add it in bulleted format. Morphh ^(talk) 17:30, 09 September 2008 (UTC)

Anyone object to Mankiw's Macroeconomics? I also have Farmer's Macroeconomics, and (you guessed it) Macroeconomics by Abel & Bernanke. lk (talk) 09:08, 11 September 2008 (UTC)

I've added Mankiw and Abel & Bernanke, in the comments I note the relevant chapters. Please use to cite liberally throughout the article. lk (talk) 10:26, 12 September 2008 (UTC)

Inflation in the long run

My understanding is that there is general consensus that in the long run, inflation is caused by money supply increasing faster than the growth rate of the economy. I.e. inflation = growth money supply - growth economic activity. Someone keeps editing this statement out of the lead. Is this controversial?

Unless there's something I'm not aware of, it seems to follow cleanly from MV = PY, as changes in M and Y dwarf changes in V in the long run. ie. velocity does not significantly grow or shrink forever. lk (talk) 09:04, 11 September 2008 (UTC)

It doesn't follow logically, since it could be that changes in P cause changes in M, for example. Identities can't imply causation. Nonetheless, I think it's generally agreed.JQ (talk) 10:33, 11 September 2008 (UTC)

I haven't noticed the edit on this, but agree. (There was a bit of back-and-forth some time ago, which recurs frequently, about how money supply growth = inflation, without any qualification such as "in the long run" or recognition of velocity - which makes all the difference).--Gregalton (talk) 10:51, 11 September 2008 (UTC)

The rate of inflation is simply measured by the growth of the money supply. However, the "net inflation", can indeed be measured as the growth of the money supply - increased production.

In the 1920s, the money supply in the US grew an estimated 70 % from 1920 to 1929. However, as the production increased so dramatically during the same period, the price level was relatively stable. The real downside of the runaway inflation was of course the crash of 1929, when all the bad investment that was made based on the created and expanded credit showed its unprofitability.

The crash spelled the end for neoclassisist Irwing Fisher's carreer and reputation as the foremost economist of the day, as he stated only weeks before the crash that no crisis was on the horizon. Naturally, he never regained his elevated position among economists after that. In sharp contrast to this incredible blunder, both Mises and Hayek warned years before the crash that the monetary policy would lead to disaster, basing their prediction on what would become known as the Austrian Business Cycle Theory. In the spring of 1929, Hayek stated that an economic collaps was imminent.

However, instead of heeding the advice of the Austrian School economists, presidents Hoover and FDR opted for Keynesianism. Their economic policy program, New Deal, was almost completely based on Keynesian theory. Its implementaion lead to the longest, deepest and most devastating depression in the history of the Western world. Only when the government started to abolish New Deal policies following the death of FDR, did the economy start to recover.

Therefore, it is very dangerous to confuse inflation with "net inflation". If anything, the Wall Street crash made that crystal clear.

Misessus (talk) 18:09, 11 September 2008 (UTC)

Misessus, I think you are fundamentally confused about the nature and purpose of Wikipedia. It is NOT a place to carry out ideological disputes, post one's opinions on various subjects or engage in original research and speculation. If you want to do that, start a blog. Wikipedia is an encyclopedia, and while some discussion on the nature of context is necessary on these talk pages, they are not meant to be a forum for a particular editor's opinions.radek (talk) 18:37, 11 September 2008 (UTC)

Yes they are, if you are of the right opinion. That has become crystal clear.

Misessus (talk) 20:51, 12 September 2008 (UTC)

3RR violation

I note a further violation of WP:3RR by Misessus, and a continued pattern of repeating the same reverts. I suggest that it's time for this user to stop or be blocked. JQ (talk) 18:55, 11 September 2008 (UTC)

If you could, please file a report at Wikipedia:Administrators' noticeboard/3RR. Since I have previously blocked that account for 3RR, it might be best if a different administrator were to handle it this time. Thank you. — Satori Son 19:03, 11 September 2008 (UTC)

Never mind - report already filed. An administrator should respond to it soon. — Satori Son 19:07, 11 September 2008 (UTC)

Suggestions to break the edit conflict

This conflict seems to be in regard to undue weight, along with an argument of fringe. It appears we agree that the viewpoint should be included, just dispute placement and weight. I think we can agree that it is a minority viewpoint on this particular topic. So the weight should proportional. This, however, does not mean that a complete understanding of that viewpoint should be excluded from Wikipedia - we strive to be comprehensive. The viewpoint can be expanded in an article about that minority viewpoint. So this article should maintain proper weight for the topic, but the Austrian School view on inflation can be further detailed in the Austrian School article or a sub-article particular to the Austrian view on inflation. There is currently a section already in the Austrian School article Austrian_School#The_Austrian_View_of_Inflation. This could be expanded with all the content that is being disputed here for inclusion in this article. This article would contain a summary (with a details, main, or see also link for more information), with the main bulk of the viewpoint (and criticism of the viewpoint) contained in the Austrian School article. So if anyone wants to read more about that viewpoint, we've maintained those details on the article about that viewpoint. Morphh ^(talk) 21:36, 13 September 2008 (UTC)

I agree entirely. The amount of information in this article on the Austrian approach is out of proportion, and it is largely repetition of what is in the Austrian economics article.--Gregalton (talk) 11:20, 20 September 2008 (UTC)

I made this change. The Austrians can go nuts on the Austrian School article and may eventually split that section into an article of it's own, but at least in this article it is in proper context and provides direct reference to the details for those that want to learn more about that viewpoint. Morphh ^(talk) 15:16, 20 September 2008 (UTC)

technical header

{{technical}}

This may have to be added to the discussion header.

The whole aspects of this article may seem too technical for the general audience.

http://en.wikipedia.org/wiki/Wikipedia:Make_technical_articles_accessible

88.105.91.219 (talk) 15:53, 19 September 2008 (UTC)

This article is too technical for the general public to grasp. It should be simplified and summarised for the public to understand it.

SystemicDestruction (talk) 18:27, 20 September 2008 (UTC)

[Image:World Inflation rate 2007.PNG]

I'm having problems with the different inflation rates in the European countries, particulary the E.U.

Shouldn't the Eurozone considered to be a single region (with a single colour), where they use the same currency, the euro?

88.105.91.219 (talk) 15:58, 19 September 2008 (UTC)

Article structure and expansion tags

I was looking at the article structure and the title "Other theories about the causes and effects of inflation" jumped out at me as something that should likely be a sub-section of "Causes of inflation" or "Effects of inflation". Does it concern anyone that putting certain sections under this "Other theories..." title may violate WP:NPOV#Article structure by minimizing viewpoints in the structure. I agree with proper weight, but we're sectioning these views off and effectively saying, these viewpoints are "theories" (compared to the others which is stated more factually as causes or effects) and pejoratively implying they are "wrong" since their not the mainstream view, which would violate NPOV. Shouldn't all the cause or effect theories fall their respective section, providing weight as appropriate to each sub-section or viewpoint?

There are a couple of expansion tags out there on gold standard and fixed exchange rates but I see no discussion on the talk. What is the goal with these (2-3 paragraphs?). It is a summary style so it is intended to by limited. Do we need these tags? Can we copy the additional needed text from the main articles to satisfy whatever expansion is requested with these tags? Morphh ^(talk) 15:59, 20 September 2008 (UTC)

Pennysaver

I was just trying to clean up your contributions. I didn't delete anything, just rearranged and presented in a slightly different way. You shouldn't take it personally when someone else edits your work. lk (talk) 19:12, 21 September 2008 (UTC)

This is what you deleted: "Similar items, for example profits and losses retained in companies, are not inflation-adjusted which result in the erosion of their values by inflation."

PennySeven (talk) 19:21, 21 September 2008 (UTC)

You do not seem to understand that it is generally accepted that the real value of retained profits and losses are eroded by inflation. PennySeven (talk) 19:26, 21 September 2008 (UTC)

You state in the article: "This means that the real value of a fixed nominal sum will depreciate over time. Similarly, prices (including rents and wages) are eroded if they are not inflation-adjusted." I agree with you. Retained profits and losses are also fixed nominal sums that will depreciate over time. Similarly, prices (including rents, wages, retained profits and retained losses) are eroded if they are not inflation-adjusted. PennySeven (talk) 19:31, 21 September 2008 (UTC)

I've removed this sentence from the lead:

Similar items, for example profits and losses retained in companies, are not inflation-adjusted which result in the erosion of their values by inflation.

There's nothing in the rest of the article to support it, and it appears to me to be OR. Before adding it back, first, some significant discussion of the effect of inflation 'profits and losses' needs to appear in the main text. And second, it needs to be cited by a high quality reliable source. lk (talk) 03:24, 22 September 2008 (UTC)

Cost of Living Adjustments

Just a note, we need a section on COLA's, Cost of Living Adjustments.

Otherwise this section in the lead is just orphaned:

This means that the real value of a fixed nominal sum will depreciate over time. Similarly, prices (including rents and wages) are eroded if they are not inflation-adjusted. To maintain their real value, nominal wages have to be updated at the rate of inflation. Therefore, in many economies, salaries, wages and other regular payments are adjusted for inflation, to keep their real values constant.

lk (talk) 19:47, 21 September 2008 (UTC)

Added COLA section. Morphh ^(talk) 2:14, 22 September 2008 (UTC)

Thanks Morphh! You're a veritable tsunami of edit cleanups, and I mean that in the best way. lk (talk) 03:22, 22 September 2008 (UTC)

The COLA text in the lead now has to be reduced.PennySeven (talk) 11:54, 22 September 2008 (UTC)

See also

I think we have too many see also links. Can we work to reduce these to only the most closely related subjects of interest. We don't need a mutli-section link farm. Morphh ^(talk) 2:45, 22 September 2008 (UTC)

According to the manual of style, 'see also' links are only for links that have not already been linked to in the text. These link should eventually be worked into the text and the see also section removed. lk (talk) 07:29, 22 September 2008 (UTC)

Views and theories

Our lead to the causes of inflation stated that "There are different schools of thought as to what causes inflation. Most can be divided into two broad areas: quality theories of inflation, and quantity theories of inflation." Yet we had no main subsection for either of these two broad areas. It would seem these should be the first two sections. The Monetarists view seemed to be mainly Friedman's restatement of the "Quantity theory of money", so should this section just be retitled to "Quantity theory of money" with a wikilink to Monetariasts in context? What is more notable - the theory or the view...? I'm trying to be bold with a little restructure, but I'm not as familiar with the particulars. We don't have much on Quality theory.. how does the Keynesian view fit in with it's sub triangle theories. I'd like to make the "Causes" section more about the theories with additional points regarding the schools of thought that support or combine the theories - a theory may be a school on it's own but perhaps not.. Morphh ^(talk) 1:47, 22 September 2008 (UTC)

I think the causes section needs some restructure. Are not the Demand-pull and Cost-push more widely held views than the Keynesians? Is Quantity theory of money more widely held than the Monetarists? It seems odd that we've grouped this by economic schools of thought unless they are they only school that holds the view. It seems we should group the theory and attribute who holds it, instead of grouping who holds certain views. Would it not be more appropriate to have each of the triangle causes as their own section, with perhaps notes regarding what schools created or support the theories? Looking for suggestions or criticism of this model. Morphh ^(talk) 13:50, 23 September 2008 (UTC)

Lead length

The lead has a lot of good info but it is too long now. Three to four paragraphs per WP:LEAD. So we need to do some trimming and merging of paragraphs. Morphh ^(talk) 15:40, 22 September 2008 (UTC)

Looks much better now. Thanks to all that helped clean it up. Morphh ^(talk) 13:03, 23 September 2008 (UTC)

Fixed monetary values etc (Pennyseven)

I trimmed the following attempt to provide a reference: "Erosion of fixed non-monetary accounting values: The real values of issued share capital, share premiums, capital reserves, trade debtors, trade creditors, profits and losses retained in companies are eroded by inflation. Ref: International Accounting Standard IAS 29 Par 5: General forces may result in changes in the general level of prices and therefore in the general puchasing power of money. Par 6: In most countries, primary financial statements are prepared on the historical cost basis of accounting without regard either to changes in the general level of prices or to increases in specific prices of assets held, except to the extent that property, plant and equipment and investments may be revalued. Par 12: Monetary items are money held and items to be received of paid in money. Par 14: All other assets and liabilities are non-monetary."

I'd like to see a reference that makes the point above (preferably in the proper ref form). This seems to me to be synthesis, making conclusions from the IAS that don't correspond more accurately with what the claim is here.--Gregalton (talk) 14:49, 24 September 2008 (UTC)

How about the source below. Here is a article by the author "Should the Audit Report specify the real value destroyed in Retained Income by the global implementation of the Stable Measuring Unit Assumption?" that references his paper below. I don't think the web post would be considered a reliable source, since it's a blog post, but I think the paper published on the SSRN would be.

• Smith, Nicolaas J. (2006-11-23). "Real Value Accounting - The Next Step in Our Fundamental Model of Accounting". Social Science Research Network. Retrieved 2008-09-24. Morphh ^(talk) 15:12, 24 September 2008 (UTC)

IMO, something about the effect of inflation on accounting values is OK in the body (properly cited of course), but it shouldn't be in the lead, cause of WP:UNDUE. This is a topic that concerns very few people and that isn't discussed in most text books. lk (talk) 15:41, 24 September 2008 (UTC)

I agree with lk. This seems like a very minor point with regard to the article as a whole and probably doesn't deserve mention in the lead. Morphh ^(talk) 15:57, 24 September 2008 (UTC)

I would like a better source. I'll be upfront on this: I believe Pennyseven is yet another sockpuppet of Nicolaas Smith, who is indefinitely blocked and has a long record of attacks and disruptive editing. (AKA Kjkkjjk or whatever, X-1111, Pacluc, etc ad nauseum). The obsession is to push this point, and his (applied for patent) RealValueAccounting and text (i.e. conflict of interest).

If other editors think this is sufficiently sourced (I would argue a) wp:undue and b) that exceptional claims require exceptional sources - i.e. there should be more than one reference really), and it can be well documented, then it may make sense.--Gregalton (talk) 16:27, 24 September 2008 (UTC)

Thanks for the clarification - I was unaware of the history. I just did a quick search on the web thinking it was a more widely addressed concept. I'll remove the statement from the lead at least, since we have at least three people that feel it is undue weight. Morphh ^(talk) 17:00, 24 September 2008 (UTC)

I've looked before on the web, and found that the characteristic terms used can be traced (as far as I can tell) only to this one person. Now, to be up front, his article did eventually get published in a South African accounting magazine - as (what I would characterise as) an opinion piece. (There was a long flurry of attacks and back and forth when I noted that the SSRN piece was essentially self-published, i.e. did not meet the test of editorial review). I should also note there are IP addresses which are easily identified as the one user that have posted outright attacks as recently as a couple of weeks ago.

For clarity, I have not yet requested a checkuser and cannot affirm with certainty that Pennyseven is the same user. I'm frankly a bit tired of running checkusers on the same two editors that have so blatantly sockpuppeteered (the other is Karmaisking aka the Truthcomesfromagunboat etc that has been harassing and attacking lk). If I turn out to be wrong about Pennyseven (and a couple of other monikers I suspect), I will apologize and admit my error.--Gregalton (talk) 17:24, 24 September 2008 (UTC)

Is it just me or is the citation provided by Pennyseven actually about inflation and the tax code rather than "erosion of non-monetary values". In either case I think both erosion of monetary value and non-monetary value, without too many specifics (article too long already) should be included in a single bullet point.radek (talk) 18:37, 24 September 2008 (UTC)

Inflation erodes historic costs per se: all historic costs. If it does it to tax assets and liabilities it does it to the historic cost of all assets and liabilities.PennySeven (talk) 18:44, 24 September 2008 (UTC)

It is a basic concept and affects all historic costs in the economy. It is impossible that it could only affect tax items. That is completely impossible. PennySeven (talk) 18:48, 24 September 2008 (UTC)

I think simply stating: "Inflation erodes the historic cost of assets and liabilities" will not be regarded by anyone as undue weight. I think all other facts have more weight than the above nine word sentence. PennySeven (talk) 19:03, 24 September 2008 (UTC)

The edit I made was to have the text correspond to the source, which was entirely about the effect on taxation. While the statement "erodes historic values" is in the text, your usage of it is incomplete; the source attaches no positive or negative value to this apart from the distortion of taxation. In other words, the source (in my view) sees the "erosion" as the mechanism for distortionary effect of inflation on taxes, not the cause or the effect. You reiterate that it affects historic costs, the question is how important that is in the context of this article.--Gregalton (talk) 19:26, 24 September 2008 (UTC)

I have reverted based on the above. Other views welcome.--Gregalton (talk) 19:30, 24 September 2008 (UTC)

The larger factor that I see regarding inflation with respect to government revenue is the capital gains that may be realized when the value of the dollar decreases, which would reduce the real value of nominal government debt. Morphh ^(talk) 19:36, 24 September 2008 (UTC)

The full quote actually appears at the top of Page 8: "Inflation erodes the historical cost of the taxpayer´s assets and liabilities." I think just stating a direct quote: Inflation erodes the historical cost of assets and liabilities - is enough. You are giving the distortion in taxation undue weight. I just found the direct quote in a taxation article available for you to verify on the net. If we highlight the distortion in taxation then we should highlight the distortion in many other areas too. I do not think that is necessary. It is generally accepted that inflation distorts many areas in the economy because of historical costs. That is why I feel that simply quoting directly from the IMF document stating that Inflation erodes the historical cost of assets and liabilities - is enough. It was not my intention at all to add a contribution about the distortion caused by inflation and historical costs in specifically taxation. I just found the direct quote in that article for you to verify on the net. It is generally accepted that inflation distorts the economy because of historical costs. It is not always that easy to find a direct quote like the one in the IMF article. In my opinion the contribution about the distortion in taxation is giving undue weight to inflation´s effect in taxation as compared to all the other areas where the same thing happens. PennySeven (talk) 20:02, 24 September 2008 (UTC)

The article is also getting too long. I think my short 9 worded statement is enough. That is my opinion. PennySeven (talk) 20:05, 24 September 2008 (UTC)

Inflation distorts the tax system. Yes. It also distorts the accounting system, financial reports, remuneration systems, all historical values, whole economies in hyperinflation, etc, etc. If we have a paragrapgh about taxation, we should have a paragraph about all the above too. Thus: undue weight given to taxation simply because the verifiable quote was found in a tax article. PennySeven (talk) 20:15, 24 September 2008 (UTC)

The article you found is about taxation, in a book about taxation; it's a little strange to claim undue weight. You say (twice!) "It is generally accepted that inflation distorts many areas in the economy because of historical costs;" I don't agree the "because of" is generally accepted at all.--Gregalton (talk) 20:40, 24 September 2008 (UTC)

Sorry, I meant undue weight in the inflation article.PennySeven (talk) 20:45, 24 September 2008 (UTC)

To save others the trouble, the full quote on page eight is actually "Third, the tax base is distorted, because inflation erodes the historic cost of the taxpayer's assets and liabilities." The bolded part of the sentence was left out.

Followed by: "Costs of acquiring property are accounted for in historical terms. The determination of income from property requires accounting for the cost of the property and allowing the taxpayer to recover this cost. Accounting for the cost in historic terms erodes the value of the cost recovery and overstates the tax base." So what you've said is the complete quote is incomplete and ignores the context, which is entirely about taxation and the determination of income/profit tax in an inflationary environment.--Gregalton (talk) 20:49, 24 September 2008 (UTC)

Don´t worry, I won´t delete the tax bit. It can stay as far as I am concerned ;-) PennySeven (talk) 20:58, 24 September 2008 (UTC)

Apparent sourcing error

• Reference 43 cites this source as a reference for Critics argue that this will cause arbitrary fluctuations in the inflation rate, and that monetary policy would essentially be determined by gold mining[43]. The only passage referring to "gold" I could find in that source says, "Crises, however, are more frequent now than during the gold standard and Bretton Woods periods". There are no references to "mining" either. I haven't checked the history; perhaps a sentence was deleted, leaving the reference orphaned. Cheers, Jayen466 19:14, 24 September 2008 (UTC)

Fixed. -- lk (talk) 16:45, 25 September 2008 (UTC)

Irrelevant paragraph

I'm in favor of removing this whole paragraph:

While not advocating a return to a gold standard, former U.S. Federal Reserve chairman Alan Greenspan did argue in favor of keeping gold reserves, "This issue was debated, incidentally, in the United States in 1976, and the conclusion was that we should hold our gold, and the reason is that gold still represents the ultimate form of payment in the world. ... And gold is always accepted and is the ultimate means of payment and is perceived to be an element of stability in the currency and in the ultimate value of the currency and that historically has always been the reason why governments hold gold."[48] However, Alan Greenspan was in favor of suppressing the gold price and testified before Congress that "Central banks stand ready to lease gold in increasing quantities should the price rise."[49] Austrian economists strongly favor a return to a 100 percent gold standard.

What Greenspan did or did not say is irrelevant. Especially since he was not talking about inflation, and he did not explicitly endorse or reject the gold standard. lk (talk) 17:00, 25 September 2008 (UTC)

I was sort of leaning that way myself when I was editing that section. For a policy that no one currently uses, four paragraphs seems a bit much (undue weight). It's bigger than monetary policy, which needs to be expanded IMO. (On a side note... wouldn't gold standard and fixed exchange rates also be a monetary policy.) I say cut the paragraph, perhaps keeping the last sentence to maintain the pov that some advocate for a return to the gold standard (so it's not completely historic). Morphh ^(talk) 17:33, 25 September 2008 (UTC)

Alan Greenspan states an essential characteristic of gold that it is "the ultimate form of payment in the world." This speaks to the nature and role of gold as money; the highest quality money and currency in the world. Despite the formal abandonment of the gold standard in 1971 Dr. Greenspan uses the present tense in his statements nearly two decades later. Additionally, the Bank for International Settlements treats gold as a financial instrument and requires appropriate accounting translations under accounting standards in its Annual Reports. These two highly credible sources in international finance and how they view and treat gold make the statements extremely relevant in this article. For these reasons I am not in favor of removing the paragraph.

The last sentence about Austrian economists favoring a return to a 100 percent gold standard needs to be sourced. The book The Case for a 100% Gold Dollar by Murray Rothbard would probably suffice. From what I understand not all Austrians are in favor of such a return. Jonahtrainer (talk) 01:32, 26 September 2008 (UTC)

Erosion of value by inflation in the economy is a very minor point and should not be mentioned in article.

I have come to agree with lk" "This is a topic that concerns very few people and that isn't discussed in most text books." and Morphh "This seems like a very minor point with regard to the article as a whole and probably doesn't deserve mention in the lead.

I agree with Morph and lk that the erosion of value by inflation is a very minor point and should not be mentioned in the article at all. PennySeven (talk) 17:58, 25 September 2008 (UTC)

To be clear, we were referring to the erosion of "accounting values". Morphh ^(talk) 18:04, 25 September 2008 (UTC)

Yes, I agree 100%. Erosion of "accounting values". Accounting values - the values that appear in balance sheets - are not real values so their erosion has no importance at all.PennySeven (talk) 18:08, 25 September 2008 (UTC)

I must admit that I was playing the Devil´s advocate above.

Alan Greenspan´s understanding of the importance of the erosion of real value by inflation is what makes him say: "Low inflation is what creates long term sustainable economic growth."

The Deutsche Bundesbank states it as follows in their 1996 Annual Report: "The benefits of price stability, on the other hand, can scarcely be overestimated, especially as these are, in principle, unlimited in duration and accrue year after year."

Low inflation means low erosion of real value in the economy and the benefits as stated above. PennySeven (talk) 21:45, 25 September 2008 (UTC)

Quality vs Quantity theories

AFAIK, the argument of Quality vs Quantity theories of inflation were last in vogue in the 18th century. I believe David Hume and Adam Smith discussed it. In modern economics, the quality theory can be seen as a counterpart to real money demand, and the desire to hold money.

IMO, we should delete references to the Quality theory of money. The Quantity theory has won out. But I'm terrible at economic history. We should probably ask someone who knows more about modern economic history.

I'm thinking that we should try to make it clear in the part about causes that the mainstream theory of money is essentially a combination of Quantity theory for long run, and Keynesian AS/AD for short run, and with arguments between New Keynesians and Chicago school over how short the short run is. But I'm not sure how to go about organizing that section.

lk (talk) 18:37, 25 September 2008 (UTC)

How do I block Radeksz?

Can somebody tell me what to do to get Radeksz blocked for repeatedly vandalizing the inflation article. Vandalizing paragraphs with many refences and with items that previously appeared in the inflation article for a long time.PennySeven (talk) 11:31, 26 September 2008 (UTC)

We should assume good faith but Radeksz is failing to discuss his concerns here (edit summaries are not the place to debate the matter). Since he is removing sourced material, I shall revert. Colonel Warden (talk) 12:05, 26 September 2008 (UTC)

I have reviewed the edits, and Radeksz's two reverts are clearly not vandalism. This is a content dispute. However, if any editor becomes disruptive by edit warring against consensus, abusing multiple accounts, or harassing other editors, they will be blocked. — Satori Son 12:34, 26 September 2008 (UTC)

PennySeven, Radeksz is not a sock. A cursory look at his history shows this. And he's not reverting without reason. You're pushing a particular POV that demands undue weight on your claim that accounting values are eroded by inflation and must be corrected for. Frankly, I don't see any reliable sources for such a claim. If you look at the discussion above, you can see that several editors have already discussed the appropriate weight for your claims, and consensus is that no more than a line or two in the body is appropriate. You're pushing the same topic that a banned sock puppet user was pushing before. If you keep on pushing it without consensus, that would be prima facie evidence that you are that banned user. lk (talk) 14:52, 26 September 2008 (UTC)

• I just searched using the phrase "accounting values are eroded by inflation and must be corrected for" and there seem to be numerous sources. This aspect seems more significant than you suggest. I also doubt that this view is so bizarre that it may be used to identify particular editors. Per WP:AGF, we should focus upon the substantive content issue rather than engaging in a witch-hunt. Colonel Warden (talk) 15:19, 26 September 2008 (UTC)

You're using google wrong. I just tried doing a search for [ "accounting values" "eroded by inflation" corrected ]. I found exactly one hit. lk (talk) 17:46, 26 September 2008 (UTC)

No, searching for exact matches in such a case is not helpful, as you found. My search was chosen to deliver sources which used the same keywords. Obviously one then needs to sift these further but the results indicated that there are good relevant sources out there. Colonel Warden (talk) 18:08, 26 September 2008 (UTC)

In that case kindly do add them. Do note that the editors here have previously searched for legitimate reliable sources to back up PennySeven's claims, and have found a couple of articles but nothing from peer reviewed journals. If you do fiind anything else, do post it below. lk (talk) 18:23, 26 September 2008 (UTC)

It is the IASB´s view in IAS 29 and in the Framework par 102 and 104 to 110 that inflation erode accounting values. The IASB represents millions of accountants in the world. It is their POV - a generally accepted POV.PennySeven (talk) 15:32, 26 September 2008 (UTC)

PennySeven's incivility, false accusations and rudeness aside, as I've indicated above I think it's fine if there's a mention of this somewhere in the article. What I object to is inserting it all over the place with clumsy references basically making the article more of a mess than it already is and giving it undue weight. Additionally PennySeven has a tendency to make like thirty different edits over a short span of time. Some of these are legit edits and some are just plain POV pushing. I'm sorry but in those cases it really is too much work to go through each of the thirty different versions and only revert the stuff that doesn't belong - hence, I reverted to the last non=PennySeven version. Perhaps in the future the user in question could discuss wordings and insertions on the talk page first before making a mess of this article.radek (talk) 16:13, 26 September 2008 (UTC)

• Your action does not distinguish the "legit edits" from the ones which you contend are otherwise. It also seems contrary to the general guidance of WP:OWN and so I intend to revert. I suggest that you instead tag the portions to which you object using a template such as Template:POV-statement. This will allow us to understand and discuss your objections better. Colonel Warden (talk) 16:27, 26 September 2008 (UTC)

I stated my reasons for not distinguishing the legit edits from the other above - edit spamming by PennySeven. Additionally the changes that I, AND OTHERS, object to have been discussed above. There's too much weight given to this in the "Effects" section. It is not notable enough to be in the lead. And do you actually think that readers will have any idea what "Ref: IAS 29 Par 12" means? I think the first two bullet points should be combined and placed further down the list - as they were before PennySeven got all crazy with this page. Please note that S/HE is the one going against consensus here, so if we're going to have a stable page while we hash our differences out it should NOT be his/her version but rather the consensus one. Hence I am reverting back to the previous, consensus, version.

Additionally, whatever happened with the "Causes" section? It used to be broken up between mainstream views and "others", again per undue weight. We had an edit war over it with another troublesome user. Now it's back in the same category.radek (talk) 16:59, 26 September 2008 (UTC)

• Your language - "spamming", "crazy", "troublesome" - is uncivil. User:PennySeven just seems to be editing the article in an ordinary way and per WP:BOLD is not required to submit his edits for approval by you or anyone else. You indicated above that the article was already a "mess" and so your new contention that there was a stable consensus version is inconsistent. My impression is that article has been in a state of flux for some days and that other editors such as User:Lawrencekhoo have also made numerous edits. Perhaps, since we have an enforced pause, someone could recapitulate the reason(s) for this sad state of affairs. Colonel Warden (talk) 17:57, 26 September 2008 (UTC)

In the light of PennySeven accusing me of being someone else's sockpuppet (based only on the fact that I disagreed with her/him) and that s/he created a whole section on the talk page with the intent of having me blocked (based only on the fact that I disagreed with her/him) I think I'm actually being quite cordial here. As far as my accusation of edit spamming on the part of that user goes, please take a look at the history of the page. Between 19:45 and midnight of last night PennySeven made almost 55 different edits. FIFTY FIVE! Some of them may have been legitimate but these were lost in the sea of illegitimate ones. I am NOT going to look through all fifty five and sift through the mess - particularly since after he was done the article looked like a mess. Furthermore, in my 5+ years experience at Wiki, I've seen a similar tactic often used by troublesome users who wish to disguise controversial (i.e. against consensus) changes among non controversial ones and who are trying to purposefully make it difficult for other editors to revert their changes. Now, I know there is the AGF policy. But I don't see how that applies to someone who's been obstinate in their revert warring and who's called you a sockpuppet without any evidence what so ever.

As far as the status of the article being a mess even before PennySeven got a hold of it, please not that there's a difference between it being a mess and it being unstable. After the last revert war with editors who wished to push a particularly Austrian POV the article became stable for about a week. It was a mess but it was a stable mess. As a result editors were able to get to work cleaning it up and making it better (Morph, I'm sorry if I reverted any legitimate edits you might have made, with this many edits it's just hard to tell). And it was getting better. Until PennySeven started disrupting the whole process, inserting his own POV and revert warring. Now it's more of a mess and unstable to boot (and I'm thankful for the protection here, btw).radek (talk) 18:40, 26 September 2008 (UTC)

I changed the causes section as it was a violation of WP:NPOV#Article structure. Undue weight is maintained in the context itself for the point of view, which has been significantly adjusted. See the Article stucture and expansion and Views and theories (and lk's post on Quality vs Quantity theories) discussion regarding restructure. As far as my thoughts on the PennySeven's edit's, I only commented on the content in the lead as undue weight with regard to "accounting values" and the article as a whole. I don't have an issue with adding additional points of view to the effects section. As for weight, I think it may need to be trimmed or merged, but I'm not sure that is reason to delete it. In fact, I think that entire section is a mess and needs to be cleaned up and put into prose. I do agree that there needs to be clarification on "IAS ref". Morphh ^(talk) 17:28, 26 September 2008 (UTC)

I am sorry if my enthusiam is seen as "spamming". I think I have the answer to the problem. I should use a "sandbox" and do all my changing in this "sandbox". I make the mistake of doing it in the article - which leads to editors accusing my of spamming. It is not intended to be spamming at all. I do not even know what spamming an article means. Most probably adding the same comment many times. I am not doing that. I am writing my contribution. I am fixing it all the time. I now see that I should do that in a sand box. Next time I will do that - if I am allowed to have a next time.

What is the clarification required on the IAS reference. It is just an incomplete reference. I stated every time that I would fix the references. I also have to sleep, you know. I was going to fix the references today. I work too. PennySeven (talk) 19:04, 26 September 2008 (UTC)

Thank you. Using the sandbox and making rough draft proposals on the talk page is definitely welcome. When you put in your references use the format "" rather then inserting it in the text.radek (talk) 19:07, 26 September 2008 (UTC)

Thank you. I will do that. I will have to wait for the protect period to pass and see what is going on. I found many good references on the net. I think IMF papers, Bernanke speeches and top newspaper reference should be regarded as reliable sources. I left out the ones I found in a Zambian online newspaper. I never knew that, but there are many references on the net for the things I state in my edits. I am pleasantly surprised.

Obviously I feel that the IASB reference should be enough. The IASB is certainly a totally reliable third party source. It represents the view of millions of accountants from all over the world. And not only accountants. There are many non-accounting groups represented at the IASB. I think economists too. I should go and have a look at their current representation. It is huge. I am referring to IAS 29 and paragraphs 102 and 104 to 110 in the IASB framework. These two references are actually references to International Financial Reporting Standards since the term IFRS is being used in the literature to include The Framework, IASs and IFRSs - all in one. PennySeven (talk) 19:20, 26 September 2008 (UTC)

Here is a list of the IASB´ Trustee Appointments Advisory Group. Most of them seem to be non-accountants.

Trustee Appointments Advisory Group

The Trustee Appointments Advisory Group is a high level and broadly representative advisory group. It was set up to help the Trustees in discharging their responsibility for nominating and appointing highly qualified and interested individuals as Trustees.

Paul Volcker, Former Chairman of the Trustees and former Chairman of the Board of Governors, US Federal Reserve System Jane Diplock, Chairman of the Executive Committee, International Organization of Securities Commissions Mario Draghi, Chairman, Financial Stability Forum Donald Kaberuka, President, African Development Bank Haruhiko Kuroda, President, Asian Development Bank Luis Alberto Moreno, President, Inter-American Development Bank Dominique Strauss-Kahn, Managing Director and Chairman of the Executive Board, International Monetary Fund Jean-Claude Trichet, President, European Central Bank Robert B Zoellick, President, World Bank

[1]

PennySeven (talk) 19:37, 26 September 2008 (UTC)

This "edit war" thing is a bit stange to me too. I think I just reverted Radekz revert ONCE after all my changes. I do not regard that as an "edit war". lol PennySeven (talk) 19:43, 26 September 2008 (UTC)

Inflation erodes historical cost non-monetary accounting values

My contribution to Effects of Inflation:

• Erosion of monetary items - Inflation erodes the real value of money and other monetary items over time.

• Erosion of historical cost non-monetary items - The real values of fixed nominal payments of non-monetary items (the IASB defines non-monetary items) like rents, pensions, wages, interest, taxes, etc. as well as non-monetary (Ref: IAS 29 and IASB Framework) assets and liabilities stated at historical cost, e.g. retained earnings, accumulated losses, issued share capital, share premium accounts, share discount accounts, capital reserves, provisions (e.g. provision for depreciation or amortisation fund), trade debtors, trade creditors, taxes payable, taxes receivable, deferred tax assets, deferred tax liabilities, dividends payable, dividends receivable, etc. - are eroded if they are not inflation-adjusted.
• Inflation erodes the real value of the government's debt.

PennySeven (talk) 19:56, 26 September 2008 (UTC)

I must admit that I am completely indifferent to whether any of this appears in the lead or not. I am interested in the economics, not whether it should be in the lead or not. As far as I am concerned none of this needs to be mentioned in the lead at all. What is important to me is the economics - that the facts are presented - with references where possible. Luckily I have - to my pleasant surprise - found many references on the net for what are in my contribution. I will look for more. I may be even more surprised.

Now I can analyse one statement and one reference at a time - and not be accused of "spamming" the article. PennySeven (talk) 20:04, 26 September 2008 (UTC)

I thus agree with Radekz that my contributions to the lead regarding the above two paragraphs in the Effects section can happily be deleted. So, that sorts that one out. PennySeven (talk) 20:08, 26 September 2008 (UTC)

I thus agree with Redekz and other editors to give it NO WEIGHT in the lead. PennySeven (talk) 20:49, 26 September 2008 (UTC)

Let´s take the first paragraph:

• Erosion of monetary items - Inflation erodes the real value of money [2] [3] and other monetary items over time. Ref: IAS 29 Par 12: Monetary items are money held and items to be received or paid in money.

Since the statement: "Inflation can also be described as a decline in the real value of money—a loss of purchasing power." appears in the opening paragarph in the lead, I feel that my first paragraph about Erosion of monetay items can be deleted.

The reason I wanted to add it is to make the Effects section complete: Inflation erodes the real value of monetary items AND historical cost non-monetary items. That is the full picture.

It is also true that inflation´s MAIN effect is that it erodes the real value of monetary items. It seems illogical to leave it out of the EFFECTS section. Friedman: inflation is always and everywhere a monetary phenomenon.

But, it can be deleted since it is already in the lead. That will make the editors happy who feel that this is being given undue weight because more of what I stated is being deleted.PennySeven (talk) 21:09, 26 September 2008 (UTC)

Now we are left with the paragraph about inflation eroding historical cost non-monetary items.

It will be difficult to delete examples that have direct reliable references. That would be directly against Wikipedia policy. PennySeven (talk) 21:15, 26 September 2008 (UTC)

I suppose we should analyze the statement sentence by sentence and example by example.PennySeven (talk) 21:18, 26 September 2008 (UTC)

I don't know that the first and third point are anything disputed (although I wouldn't put the erosion of government debt as a positive, depends on if your the borrower or the lender - this good / bad structure should probably go altogether.) The second statement also has several early points that are uncontested. The dispute seems to be over the non-monetary assets and liabilities but this does contains many refs, which seem to be acceptable as a reliable source. I think the second statement is verbose (I think we have an e.g. within an e.g.), but over all, I'm not opposed to the inclusion of this content. Morphh ^(talk) 21:24, 26 September 2008 (UTC)

The third point:

I only noticed now that it was also deleted. I think it is the way the deletion was done. In fact, it was that.

The third point was included under the second section in the Effect section:

Some possibly positive effects of (moderate) inflation include:

I found it in Bernanke´s speach and included it in that "positive effects" section. Perhaps Radeks did not really wanted to delete it, but it was deleted in the way he did the deletion.

It can be deleted as far as I am concerned. I am not really interested in that. I just happened to find Bernanke saying that. PennySeven (talk) 21:38, 26 September 2008 (UTC)

I am not Shakespear - so if you can rewrite it in a less verbose way I am happy to check that it still means the same.

The "non-monetary" assets and liabilities: The IASB defines monetary and non-monetary items. I do not think that should really be a problem. The split between monetary and non-monetary items in my contribution is necessary because the monetary erosion is dealt with in the first paragraph. Monetary items are very different from non-monetary items.

Another editor stated: "Fixed nominal payments (e.g. rents and wages) are eroded if they are not inflation-adjusted." Not all "fixed nominal payments" can be inflation-adjusted. "Fixed nominal payments" of monetary items cannot be inflation adjusted because money and other monetary items cannot be inflation-adjusted. Only nominal (historical cost) non-monetary items can be inflation-adjusted. That is why I changed that editor´s statement to: "The real values of fixed nominal payments[9] of non-monetary items (the IASB defines non-monetary items) like rents, pensions,[10] wages,[11] interest, taxes, etc. I have to fix the IASB reference. The other editor only mentioned rents and wages. I added pensions, interes and taxes to cover the four main areas of income plus pensions: rent being the income of land and property, wages of employment, interest of money and taxes of government - plus pensions being the income of retired people. Those are the main "income" areas. PennySeven (talk) 22:03, 26 September 2008 (UTC)

Then I added: "as well as non-monetary (Ref: IAS 29 and IASB Framework) assets[12][13] and liabilities stated at historical cost".

Again: I will fix the IASB references. Again: only non-monetary assets and liabilities can be adjusted for inflation. And they have to be historical cost items. Non-historical cost items are automatically adjusted for inflation in the way they are valued in terms of IFRSs.

Then I just started listing historical cost non-monetary items as defined by the IASB in IAS 29. That they all have to be adjusted for inflation is stated in IAS 29. I also found other direct references for Provisions (amortization fund) and taxes payable. There seems to be numerous direct references to the fact that taxes payable are eroded by inflation - mainly because of Tanzi´s work in Brazil.PennySeven (talk) 22:23, 26 September 2008 (UTC)

BTW, thank you for your vote of confidence in the economics presented. I almost fell out of my chair!!PennySeven (talk) 22:35, 26 September 2008 (UTC)

I must again state that I am very pleasantly surprised at the many direct references I found relating directly to what I contributed.

And I have not really put in a great effort to find references. I am really surprised.PennySeven (talk) 22:38, 26 September 2008 (UTC)

The reason I did not look for direct references before is that I feel everything is adequately covered in IAS 29 and par 102 and 104 to 110 in the IASB´s Framework. The IASB is an outstandingly reliable third party reference. PennySeven (talk) 22:42, 26 September 2008 (UTC)

It is also nice to know that my frequent edits here are not going to be labelled "spamming". How anyone can see the above as spamming beats me. PennySeven (talk) 22:58, 26 September 2008 (UTC)

Protected

Article protected 24 hours for edit warring. Please discuss the edits on the talk page. (I don't have a dog in this hunt, except that someone else was applying IAS + a clearly non-realiable source to hyperinflation, and I may have deleted some of the IAS comments.) — Arthur Rubin (talk) 17:07, 26 September 2008 (UTC)

Yes, you have. You have also deleted another editor´s comment that he searched and found numerous references for something like : inflation erodes the real value of accounting items and should be corrected - or something like that. 213.63.46.8 (talk) 17:22, 26 September 2008 (UTC)

Endorse protection: I was considering doing it myself. The alternative seems to be short blocks for edit warring.--Tznkai (talk) 17:26, 26 September 2008 (UTC)

To the anon. Please explain. I reverted the NESARA interpretation in Inflation accounting, but I can't see that I've edited Inflation in a few months. — Arthur Rubin (talk) 17:28, 26 September 2008 (UTC)

He seems to be referring to my link to sources which still appears above. Some confusion between the talk page and the article, perhaps. Colonel Warden (talk) 18:00, 26 September 2008 (UTC)

NPOV tag

Any objections to removing the NPOV tag? The original issue for which it was placed seems to be resolved. Since I seen no active or specific NPOV objections (required for the tag placement as a last resort), I suggest we remove the tag unless someone wants to outline a specific issue that violates policy so others can attempt to discuss and address the issue. Morphh ^(talk) 13:10, 25 September 2008 (UTC)

I believe the tag was placed by Misessus who was objecting to our contention that his edits about the Austrian school were WP:UNDUE. I'ld say we have consensus among econ wikiproject members that the page looks much better now. lk (talk) 16:54, 25 September 2008 (UTC)

I haven't placed any flags anywhere, but you've never been shy to make false assumptions and accusations before, so I wasn't surprised to read this. As far as I'm concerned, I think the current state of the article is rather okay. Could be a lot better of course, but you can't ask too much of WP. That much I've learnt the hard way.

Misessus (talk) 13:12, 27 September 2008 (UTC)

Weight to be given to the fact that inflation erodes historical cost non-monetary values

Before the freeze expires we should probably try to agree on the weight to be given to inflation accounting. I'm of the opinion that it deserves a couple of lines, and an internal link to the inflation accounting page. It should not be in the lead, and shouldn't be in more than one place. (This includes mentions of devaluing of non-monetary items etc, and any other similar claims.) The effect of inflation on money and monetary items with fixed nominal values is a more mainstream view, and statements about this should perhaps be a little more prominent. Additionally, given the importance of this subject and amount of sources about it, we should strive to use the highest quality sources. Peer-reviewed journal articles, university published book, reputable textbooks, and important mainstream newspapers & magazines. lk (talk) 09:12, 27 September 2008 (UTC)

• Our usual style seems to be a section which provides an outline and which starts with a main link to the article on the sub-topic. For example, see Large Hadron Collider#Safety of particle collisions. Colonel Warden (talk) 09:24, 27 September 2008 (UTC)

Please note: This is not inflation accounting as attempted in the 1970´s. This is about what the IASB provided for in Paragraphs 102 and 104 to 110 of the Framework; namely, that accounting can be done in a way to attain capital maintenance in terms of constant purchasing power units instead of using the Historical Cost model. The IASB is not promoting 1970 style inflation accounting in par 102 and 104 to 110 of the Framework as Lawrencekhoo are really referring to when he states: "we should probably try to agree on the weight to be given to inflation accounting." This is not inflation accounting. Please do not use that term in reference to what we are discussing here because it is not what this is about - although almost everyone without exception immediately thinks that is what this is about. It is not.PennySeven (talk) 10:30, 27 September 2008 (UTC)

I disagree completely with an internal link to the inflation accounting article. Maybe an internal link to the Historical Cost article, yes. But definitely not to the inflation accounting article because the IASB is not promoting 1970 style inflation accounting in the Framework.PennySeven (talk) 10:34, 27 September 2008 (UTC)

• We should take a global and historical view of topics in our articles and should not seek to promote a particular POV. Some countries still have to deal with high inflation and must account for it in some way. See this paper on Mexico, for example. If there is confusion about the different methods and standards for this then we should try to clarify the matter. We should not make assumptions about what our readership is looking for and should provide them with narrative which explains which link to follow for more detailed treatments. Colonel Warden (talk) 10:51, 27 September 2008 (UTC)

The topic of this article is inflation not inflation accounting. The fact that inflation erodes historical cost non-monetary items and is corrected by inflation-adjusting only such items is what we are discussing here; specifically the weight it should be given in the article. We can point out that the IASB provided for this in the Framework, Par 104 (a): "Financial capital maintenance can be measured in either nominal monetary units or units of constant purchasing power." In my opinion it is very clear that the IASB is not promoting 1970 style inflation-accounting with their provisions in the Framework. The IASB promotes the POV of millions of accountants all over the world. This is important in the global sense since all economic activity is accounted by accountants. This article is not about high inflation and the fact that some countries have to deal with it. It is simply about inflation. This is my respectful opinion. As far as I am concerned you can link to the inflation accounting article, the histrical cost accounting article and the hyperinflation article. Inflation influences many areas. I am sure more internal links would come to mind. They are all related.

PennySeven (talk) 12:24, 27 September 2008 (UTC)

Mexico: I could not open your link. I see Mexico ended inflation accounting. [4]PennySeven (talk) 12:28, 27 September 2008 (UTC)

The reason I refer to the IASB´s Framework and IFRSs is that the IASB represents the view point of millions of accountants. I did not dream up this point of view all by myself. The Framework and IAS 29 are quite old statements. The numerous direct references on the internet are also another indicator that this is not my single point of view.PennySeven (talk) 12:37, 27 September 2008 (UTC)

Please also note that it is not really necessary to state that monetary items have fixed nominal values. All monetary items have always had fixed nominal values since money and other monetary items cannot be inflation-adjusted. Only historical cost non-monetary items "with fixed nominal values" can be inflation adjusted. See IASB Framework Par 102 and 104 to 110.PennySeven (talk) 10:41, 27 September 2008 (UTC)

As far as weight is concerned I am sure everyone will agree with the following:

Nothing in the lead.

The following statement at the very end of the Effects section - after the Austrian view:

Inflation erodes the value of historical cost non-monetary values.

I do not think anyone will object to that.

I will add all the references that appear in the deleted version at the end as references in reference format. —Preceding unsigned comment added by PennySeven (talk • contribs) 13:05, 27 September 2008 (UTC) PennySeven (talk) 13:09, 27 September 2008 (UTC)

That will give it the least weight possible: nine words.PennySeven (talk) 13:11, 27 September 2008 (UTC)

If those nine words are still considered to give too much weight to the subject then the statement can be reduced to five words:

Inflation erodes nominal non-monetary values.

I can also state the same in four words but that will be too much of pure fact for editors to accept. PennySeven (talk) 17:04, 27 September 2008 (UTC)

• More words are needed, not fewer. Your sentence currently appears at the foot of a list of beneficial effects of inflation. I doubt that the effect is beneficial but it hard to tell because the sentence is so terse. Colonel Warden (talk) 22:36, 27 September 2008 (UTC)

Colonel Warden, I am sorry I never noticed your comment before. You are right. I had the sentence in the wrong spot. I have already moved it. I am sorry that I had to remove the sentence after I moved it to the right place. I tried to reduce the sentence to as few words as possible because the "several Econ wikiproject members" group of inflation editors considered that this global effect of inflation in the overall real or non-monetary economy was being given too much weight - actually because I am the one who tried to add it. Previously I mentioned something about the fact that salaries are inflation-adjusted and some-one grabbed it and added the large Cost of Living Allowance sub-section. That was not considered too much weight for one single aspect of inflation´s very many effects. The unfortunate fact about this global very destructive non-monetary effect of inflation is that its inclusion in the article is not being based on generally accepted and correctly referenced economics, but on the personal attitudes of this "several Econ wikiproject members" group of editors involved here at the inflation article against me. Gregalton (or his "alter ego" Radeksz), the ring leader of this group, will eventually remove the sentence because of this witch-hunt against me. As to the terseness of the sentence: This "several Econ wikiproject members" group of inflation editors do not understand the importance of this non-monetary effect of inflation. They do not understand that the whole gambit of proofs of global value erosion in historical cost non-monetary items can be laid bare from an international accounting standard type statememnt like: Inflation erodes the real value of historical cost non-monetary items. Unfortunately I will not be allowed to add a statement like that to Wikipedia. As far as more words are concerned you will notice that Lawrencekhoo - a member of this group - wished to restrict the statement to as little as possible.PennySeven (talk) 22:53, 28 September 2008 (UTC)

Colonel Warden,

This is the long version of the statement:

• Inflation erodes the real value of historical cost non-monetary items - The real values of fixed nominal payments [5] of non-monetary items like rents, pensions [6], wages [7][8] , interest, taxes, etc. as well as non-monetary assets [9] [10] and liabilities stated at historical cost, e.g. retained earnings, accumulated losses, issued share capital, share premium accounts, share discount accounts, capital reserves, provisions (e.g. provision for depreciation or amortisation fund[11]), trade debtors, trade creditors, taxes payable [12] , taxes receivable, deferred tax assets, deferred tax liabilities, dividends payable, dividends receivable, etc. - are eroded if they are not inflation-adjusted.Adjusting Taxes for Inflation

You are welcome to add as much of it as you want in the article. I am not going to do it.PennySeven (talk) 00:11, 29 September 2008 (UTC)

You will note that the long version comprises 5 and a half lines of prose to state the global effect of inflation in historical cost non-monetary items in the real economy while the Cost of Living Allowance sub-section comprises 10 lines of prose.PennySeven (talk) 00:48, 29 September 2008 (UTC)

Inflation erodes nominal non-monetary items - removed from article

I removed the statement for the following reasons:

1. No consensus reached on this talk page about the matter. 2. A contribution described by a respected Econ wikiproject member - Radeksz - with complete impunity as "nonsense" will obviously never make it onto the article page. 3. The members of this "several Econ wikiproject members" group of inflation editors are conducting a witch-hunt. 4. Gregalton or his "alter ego" Radeksz will eventually remove the statement - so why waste all this time on it.

PennySeven (talk) 22:47, 27 September 2008 (UTC)

It is mainly the certainty that Gregalton will eventually remove the statement that decided the matter for me.

PennySeven (talk) 22:57, 27 September 2008 (UTC)

At least it was quite fun to eventually discover that Radeksz is Gregalton´s "alter ego". Reading Wikipedia news that this is not so uncommon on Wikipedia also put the last nail in it for me.

PennySeven (talk) 23:10, 27 September 2008 (UTC)

As I've indicated above I was merely objecting to 1) you making the article a mess and inappropriately citing refs, 2) giving undue weight - which means I was fine with a short, well written and well referenced mention of historical costs in the bullet section. Please note that ALL items in that list are short and finally 3) your uncivil attitude and baseless accusations which you throw around. In particular accusations of sock puppetry are quite insulting.radek (talk) 23:43, 27 September 2008 (UTC)

Yes, yes, Gregalton.

Anything more to say? I´m sure you never thought I would catch you with your "alter ego". I will not tell you what give you away.PennySeven (talk) 10:20, 28 September 2008 (UTC)

My dear Gregalton,

this time you are keeping something that is well referenced out of Wikipedia. I´m sure all your fans will give you another Barn Star for that. BTW, how is the Barn Star count going? Received any more lately?PennySeven (talk) 10:53, 28 September 2008 (UTC)

Gregalton,

"merely objecting" and calling my contribution "nonsense" are two very different things. Now, you are "merely objecting". Previously you called it "nonsense" and not a single editor here sanctioned you for that. Other editors are punished for personal attacks when they do that. But, not you. The age old story: courses for horses. But, you are a "mainstream" Wikipedia editor - even with an "alter ego". So, you are protected.PennySeven (talk) 12:01, 28 September 2008 (UTC)

Gregalton,

At least Dr Lawrencechkoo, Phd., in academia, defended you saying you are just a little "brusque" with me. Maybe he is about to give you a Barnstar for your "brusque" diplomacy. PennySeven (talk) 12:11, 28 September 2008 (UTC)

Gregalton,

Btw, congratulations! Inflation is another article you are keeping in the dark ages. Add it to Historical Cost, Hyperinflation and Inflation Accounting. Your influence is very pervasive in economic articles on Wikipedia: oh yes: with your "alter ego" Have you got more than one?.PennySeven (talk) 12:40, 28 September 2008 (UTC)

Lawrencekhoo, are you going to delete all my references?

lk (talk, Since you are very much against any facts about this contribution appearing in the article, please tell me if you are going to delete the reference to a Cambridge University Press publication because I quote the direct reference in the reference. The facts about this contribution will thus appear in the references. Are you going to delete the reference because of that. I would appreciate it if you could be so kind as to tell me now if you are going to delete all the references because I am going to spend a lot of time doing this with all the references and you may delete all of them because you do not want any facts about this contribution shown.PennySeven (talk) 20:13, 27 September 2008 (UTC)

lk talk please check the first reference for "Inflation erodes nominal non-monetary values" in Effects and let me know. Thank you.PennySeven (talk) 20:18, 27 September 2008 (UTC)

Inflation erodes the real value of historical cost non-monetary items How about Inflation erodes the real value of historical cost accounting items. Less confusing for the layman.

Yes, that is fine.PennySeven (talk) 18:22, 30 September 2008 (UTC)

This part should be a separate item: " fixed nominal payments [13] of non-monetary items like rents, pensions [14], wages [15][16] , interest, taxes, etc. " It would be nice if the sources were cleaned up a bit. Do you know how to wikify sources? lk (talk) 19:31, 29 September 2008 (UTC)

No, I don´t.PennySeven (talk) 18:22, 30 September 2008 (UTC)

This appears in the text: "Insert the text of the quote here, without quotation marks", but when you edit the text it is not there to edit or add to. Can you please explain again where to add the text in the reference?PennySeven (talk) 19:00, 30 September 2008 (UTC)

Wikipedia:Citation templates will help your formatting by using a template. To learn more about reference styles (we use footnotes), see WP:CITE and WP:FOOT. Morphh ^(talk) 19:22, 30 September 2008 (UTC)

Thank you.PennySeven (talk) 19:24, 30 September 2008 (UTC)

Using quote= in the template allows you to quote the material. Morphh ^(talk) 21:15, 30 September 2008 (UTC)

Thank you. That was what I was looking for.PennySeven (talk) 21:26, 30 September 2008 (UTC)

Inflation erodes the real value of the government's debt.

This is a direct quote of what Bernanke said in his speech:

"In brief, the reason is that people know that inflation erodes the real value of the government's debt and, therefore, that it is in the interest of the government to create some inflation."

He is correct in what he stated since he was referring to the capital amount that the government actually has to pay back.

The interest the government pays on the debt is another economic item. PennySeven (talk) 17:12, 29 September 2008 (UTC)

You're using accounting arguments, when the relevant arguments are economic. Gov debt is rolled over constantly. If inflation rate is stable, the cost of financing gov debt is about the same no matter what the inflation rate is, as long as it doesn't change. If the government pre-announces an increase in the inflation rate, there will also be no change in the cost of financing government debt. Only an unexpected increase in inflation will decrease the real value of government debt. lk (talk) 19:18, 29 September 2008 (UTC)

I agree with you that the cost of financing gov debt is a known value as long as the inflation rate and interest rates do not change (there are most probably even more factors involved). Please note that you write about the cost of financing in your second sentence and then you change to the real value of government debt in your last sentence. The cost of financing the fixed capital amount borrowed and the actual fixed capital amount are obviously two different things. There are two economic items involved: the capital amount that is a fixed historical cost value that decreases in real value as inflation increases - at any rate of inflation. That is why Bernanke said: inflation erodes the real value of the government´s debt. Then we have the cost to the government of borrowing that money. That is what you are dealing with. I agree with what you say regarding the cost of financing government debt. What Bernanke said applies to the other item, namely, the fixed capital amount of the debt that is eroded at any level of inflation. —Preceding unsigned comment added by PennySeven (talk • contribs) 19:42, 29 September 2008 (UTC) PennySeven (talk) 19:46, 29 September 2008 (UTC)

This is not that important to me. I just think we should try and put correct statements in the article to improve the article´s credibility. When users read parts of articles that are not 100% correct, the article as a whole loses credibility to them - I think.PennySeven (talk) 19:52, 29 September 2008 (UTC)

That is in the governments books. Then we have the other side. The lender holding or owning that bond/bund or T-bill and trading it on the market. The T-bill´s value changes daily because of many factors. It is a specialist area of trading. PennySeven (talk) 20:09, 29 September 2008 (UTC)

I just happened to find the following reference: [17] Page 14 : The real value of the debt shrinks by a proportional amount (pie) as inflation erodes away the real value of the debt principal owed by the government.

I think it should be fine when I change the statement to: Inflation erodes the real value of the government's debt. PennySeven (talk) 22:21, 30 September 2008 (UTC)

Erode or reduce?

In the statement regarding inflation´s effect on historical cost non-monetary items 7 references state "erode". I think it is correct to say that: Inflation erodes the real value of historical cost accounting items.PennySeven (talk) 08:54, 1 October 2008 (UTC)

Lawrencekhoo, why did you remove the following Bernanke reference from the article without any explanation?

<

"people know that inflation erodes the real value of the government's debt"

What´s going on here?PennySeven (talk) 09:07, 1 October 2008 (UTC)

I certainly do not think it is correct to remove a Bernanke quote that states: "Inflation erodes the real value of government debt." from the following contribution to a Wikipedia article: Inflation erodes the real value of government debt.

It is a direct quote from the current Chairman of the Federal Reserve Bank. PennySeven (talk) 09:11, 1 October 2008 (UTC)

As can easily be verified from all the quotes, except one, the generally accepted term is certainly "erode". PennySeven (talk) 09:13, 1 October 2008 (UTC)

Lawrencekhoo,

Please note that I am assuming good faith here. I am giving you the benefit of the doubt. It is a Wikipedia policy and I also personally hold that belief.PennySeven (talk) 11:21, 1 October 2008 (UTC)

You seem to have done a google search on 'erodes inflation' and have thrown anything relevant into references. Erodes is not NPV language. It implies a bad thing. Please see WP:NPV. I threw out the Bernanke source as it's not as good as the one there already. Please do not over footnote. lk (talk) 17:28, 1 October 2008 (UTC)

There are way too many foot notes now. It's a real eyesore. Looking again at the footnotes many of them are not relaible sources or are not directly relevant. Please try to trim down the number of footnotes. lk (talk) 17:41, 1 October 2008 (UTC)

You have got it wrong: Bernanke´s reference was there first. I think the Fed Chairman´s statement is certainly a very reliable source.

Not just anything relevant: A Cato Institute paper, a World Bank paper, an IMF paper, a Ben Bernanke speech, USA Today, and Evening Standard UK amongst others.

Most of the quotes are directly relevant. I will trim the other footnotes.

A Cato Institute paper, a World Bank paper, an IMF paper, a Ben Bernanke speech, USA Today, and Evening Standard UK are certainly reliable sources.

Please do not delete a reference that is a direct quote of what is in the article - especially not a Ben Bernanke quote - without any explanation as you initially did. That is not considered good behaviour on Wikipedia.

I will remove some of the references. PennySeven (talk) 18:01, 1 October 2008 (UTC)

Now we have 12 quotes with the word "erode" in the two statements in the article. PennySeven (talk) 19:11, 1 October 2008 (UTC)

It's also the placement of all the refs scattered throughout the sentence that makes it odd or gives the appearance of over-referencing. Adding too many makes it look like you're trying to make a point, which can fall into neutral presentation territory. So if you have multiple refs that can support the statement, pick the best one or two and leave it at that. I'd also try to get refs that support a sentence. Right now we have what seems like a ref for every other word. What does that mean, that the ref only supports the context for that particular term? It would be better to have a sentence and then have two or three references (four or five at most) at the end that supports the statements in the sentence. It makes sense to split them up if a source only supports part of the sentence, but a ref for every word does seem a bit extreme to me. I'm not going to change it, as I don't know that there is anything technically wrong with it, but it certainly is distracting for a reader. Morphh ^(talk) 13:02, 03 October 2008 (UTC)

Morph, With regard to the contribution: Inflation erodes the real value of historical cost accounting items, I would be quite happy to just state the following directly related IMF reference at the end of the sentence:

ref "Adjusting Taxes for Inflation" (PDF). Tax Law Design and Drafting (volume 1). International Monetary Fund. 1996. pp. p. 8. Retrieved 2008-09-30. ... inflation erodes the historic cost of the taxpayer´s assets and liabilities. {{cite web}}: |first= missing |last= (help); |pages= has extra text (help); Missing pipe in: |first= (help) /ref

This is currently reference number 29. This is an excellent global reference. It refers to all historical cost items: monetary and non-monetary items since it states “assets and liabilities”. In my opinion this single reference states everything about what we are adding. Additionally, I want to leave the references for Retained Earnings, Issued Share Capital and Payables and Receivables since they are the three most important examples. What do you think about that?PennySeven (talk) 20:11, 3 October 2008 (UTC)

We could thus remove current reference No 28 Assets, No 32 Provisions and No 33 Taxes Payable.PennySeven (talk) 20:36, 3 October 2008 (UTC)

The following World Bank reference is another excellent one. It mentions real or non-monetary items. It is in relation to hyperinflation and may confuse less well-informed readers since it states that all non-monetary items have to be inflation adjusted which is required in hyperinflation.

ref [18] In the balance sheet approach, all the real or non-monetary items in assets and liabilities as well as the net worth in the balance sheet are adjusted for inflation and the adjustment is directly applied for both financial accounting and for tax purposes. /ref

I would add this at the end of the whole sentence with the other end-of-sentence one as you suggested.PennySeven (talk) 20:32, 3 October 2008 (UTC)

This sounds better to me. The only reason to keep additional refs would be if the material is further challenged. We have the refs in the history if we need to add specific ones back in. Morphh ^(talk) 20:53, 03 October 2008 (UTC)

Ok. Done. I fixed the first statement in the same way: removed the refs for the examples and left the reference at the end of the sentence.PennySeven (talk) 21:22, 3 October 2008 (UTC)

Too much weight being given to the Cost of Living Allowance.

I think that too much weight is being given to the Cost of Living Allowance.

Someone should trim it.PennySeven (talk) 19:13, 1 October 2008 (UTC)

It's a standard topic that's found in almost all Macroeconomics textbooks. I suggest have a look at some university level Macroeconomics text books, that will give you a good sense of what is important in the economics literature. lk (talk) 01:55, 2 October 2008 (UTC)

My first question: How come it took years to get onto the Inflation page?

I also regard it as important. But I just thought it was given too much weight - relative to what is in the article at the moment.

Not a serious matter though.PennySeven (talk) 05:52, 2 October 2008 (UTC)

Price stability

I think price stability is a sufficiently complex subject to warrant a seperate article. It should not redirect to this article.PennySeven (talk) 21:28, 7 October 2008 (UTC)

Please read WP:OWN, it is not proper to behave as if you own an article. LK (talk) 19:48, 12 October 2008 (UTC)

Congress should be to blame for raising the minimum wgaes last year to cause the inflation in California to from $7.00 to $8.00 but now with inflation hitting higher and higher, California is trying to raise it to $9.00 where small businsses can't afford even at the $7.00 rate. Look at the state, it is paying $6.50 an hour California to state workers butwant to try to raise here again. Don't make sense at all. —Preceding unsigned comment added by 209.129.64.1 (talk) 22:28, 3 November 2008 (UTC)

Penny Seven, please stop expanding the section on inflation and historical cost accounting

The editors here have had this discussion already. We (including you) agreed that proper weight (as per WP:UNDUE) for this topic is a couple of sentences. Please stop pushing to expand it.

Also, you should know that just because someone somewhere published a sentence doesn't give license to insert it into the article. For instance, it is not proper to google for a sentence that you want to insert, and then if you find that that sentence has be published somewhere use that as a source to insert it. That is not proper sourcing. The source must be considered in its entirety, and the sentence must be considered in context. One must then consider, does the source fully support the statement made in the article? Also, one must consider if the source is reliable (see WP:RS). In general, only the best reliable sources (peer reviewed papers, university textbooks, major mainstream newspapers) can be used to source statements of fact made in the encyclopedic voice. Other sources are questionable (see WP:QS).

Additionally, the article must reflect all the diverse viewpoints and information available on a subject in a balanced way (See WP:NPV, and WP:UNDUE). The three main content policies are WP:NOR, WP:V, and WP:NPV – all three are equally important.

It would be best if you were to edit some other pages as well and leave the topic of inflation accounting alone for a while. The way you keep on pushing at it betrays a conflict of interest, ie. that you have some stake in real life that this page reads a certain way. You should know that it is against Wikipedia guidelines for editors to edit a page if they have a real world stake in the contents of the page.

LK (talk) 19:45, 12 October 2008 (UTC)

A document from Citibank is not a reliable source for factual statements about economics in the encyclopedic voice. They publish hundreds of thousands of documents, and there is no guarantee of quality control. Have a look at WP:SOURCES, reliable sources are (in order of reliability), i) university based peer-reviewed academic journals and university published academic books. ii) university level text books, iii) major mainstream newspapers. You will notice that self published documents (which Citibank documents are) are specifically not a reliable source. LK (talk) 20:08, 12 October 2008 (UTC)

By not editing something out, I was implicitly agreeing that the page was OK as it was. There's no reason to remove things based on the guess that another editor may find it objectionable. I would prefer it if there was less drama here. LK (talk) 20:21, 12 October 2008 (UTC)

Please count this as another vote for less drama. Sarcastic comments are not constructive. --DanielRigal (talk) 22:58, 12 October 2008 (UTC)

Sir, I added it once, deleted a wrong reference and added one full stop??.

Sir, I respectfully added the contribution once, as you requested.

Then I deleted a wrong reference that was inadvertently included in the first once-off addition.

Then I noticed that a full stop was missing at the end of the statement. I added one full stop.

I did not add the full contribution three times.

PennySeven (talk) 17:21, 15 October 2008 (UTC)

You added the same material twice. — Arthur Rubin (talk) 17:47, 15 October 2008 (UTC)

Retained earnings, issued share capital, capital reserves, provisions, taxes, dividends, trade payables and receivables are historical cost non-monetary items. (The second statement.)

They are not nominally fixed payments like rents, pensions, wages, interest, and taxes. (The first statement.)

The two statements:

[1] Inflation erodes the real value of nominally fixed payments - The real value of fixed nominal payments (like rents, pensions, wages, interest, and taxes) are eroded by inflation. In many countries, such payments are adjusted for inflation on an annual basis.

and

[2] Inflation erodes the real value of historical cost accounting items - The real values of non-monetary assets and liabilities stated at historical cost, (e.g. retained earnings, issued share capital, capital reserves, provisions, taxes, dividends, trade payables and receivables, etc.) - are eroded when they are not inflation-adjusted. Two percent inflation - the European Central Bank´s definition of price stability - will erode by 51 percent the real value of historical cost non-monetary items over 35 years.

are two different statements that have been discussed at length on this talk page and agreed by various editors.

The two statements have been changed in various ways as a result of this previous long discussion about these two statements.

You can check the history page of the talk page and other editors can confirm this.

PennySeven (talk) 17:59, 15 October 2008 (UTC)

See on this talk page:

30 How do I block Radeksz?

31 Inflation erodes historical cost non-monetary accounting values

32 Protected

33 Weight to be given to the fact that inflation erodes historical cost non-monetary values

34 Lawrencekhoo, are you going to delete all my references?

35 Inflation erodes nominal non-monetary items - removed from article

37 Erode or reduce?

40 Penny Seven, please stop expanding the section on inflation and historical cost accounting

PennySeven (talk) 18:07, 15 October 2008 (UTC)

I have invited Vision Thing to join us in this discussion. Till now he or she has just ignored my items on his or her talk page. Let us wait and see if Vision Thing will join us here. PennySeven (talk) 21:10, 7 January 2009 (UTC)

Inflation is always and everywhere a monetary phenomenon - Milton Friedman.

Inflation has no effect on the real value of non-monetary items

because

it is a monetary and not a non-monetary phenomenon. It is important to stress that even if readers do not understand the importance of the statement.PennySeven (talk) 13:06, 2 December 2008 (UTC)

Friedman's statement is not without controversy, and as such it shouldn't be in the lead. It reflects a Monetarist viewpoint. Keynesians (old, new and otherwise) believe that inflation in the short term can be non-monetary, and can have real effects on the economy. This is the majority view among economists today. LK (talk) 17:42, 6 January 2009 (UTC)

Lawrencekhoo,

1. Do you agree that inflation is impossible in a 100% barter economy?

2. Do you agree that when accountants implement a Constant Purchasing Power Accounting model as they are given the choice by the IASB in the Framework Par. 104 (a) (which is part of IFRS) and measure financial capital maintenance in units of constant purchasing power that there will be no "inflation" effect in constant real value non-monetary items like retained earnings, issued share capital, other shareholder equity items, deferred tax assets and deferred tax liabilities, taxes payable and taxes receivable, other non-monetary payables and other non-monetary receivables, other non-monetary creditors and other non-monetary debtors, etc?

Par. 104 (a): "Financial capital maintenance can be measured in either nominal monetary units or units of constant purchasing power."

3. Do you agree with the following two Turkish economists that:

"Purchasing power of non monetary items does not change in spite of variation in national currency value."?

[19]

Prof. Dr. Ümit GUCENME, Dr. Aylin Poroy ARSOY, Changes in financial reporting in Turkey, Historical Development of Inflation Accounting 1960 - 2005, Page 9.

PennySeven (talk) 19:03, 6 January 2009 (UTC)

This non-monetary stuff is trivia just "stuck there" like that. Friedman in this quote is usually taken to be referring to "monetary" as opposed to "fiscal", not "non-monetary". Professor marginalia (talk) 19:24, 6 January 2009 (UTC)

It is not "stuff" and it is not trivia. Friedman states that inflation is always a monetary phenomenon, that is, it is not a non-monetary phenomenon. The two Turkish academics who were invited to the US to present their research, state the same. It is directly related to the Friedman statement. It is not "just stuck there like that."PennySeven (talk) 19:37, 6 January 2009 (UTC)

What? Friedman isn't mentioned at all in the Turkish paper. The quote you're using is taken completely out of context, from a section describing Turkish regulations in their calculation of an inflation adjustment. Friedman did say that inflation was caused and cured by monetary policy. Juxtaposing the claim about non-monetary bartering purchasing power with his quote is a non-sequitur. Inflation has been exhaustively written about, analyzed and debated by big name, Nobel prize winning economists, and this quote about non-monetary purchasing power couldn't be more obscure. Has this paper ever been cited somewhere besides this encyclopedia? Professor marginalia (talk) 20:08, 6 January 2009 (UTC)

As you can see from the link the authors of the paper were invited by the Deloitte & Touche Professor of Accounting Emeritus at the Fisher College of Business at the Ohio State University who is also the President of the Academy of Accounting Historians to present their paper to the Academy of Accounting Historians research conference which was jointly sponsered by the Accounting Hall of Fame in Columbus, Ohio, USA in 2005.

I did not say that Milton Friedman was mentioned in their paper. They simply say the same he said just looking at it from the non-monetary side. They are saying: inflation is only a monetary phenomenon and has no effect on non-monetary items. It is logical is it not: if inflation only effects money and monetary items it logically will not effect non-monetary items. It almost needs not to be stated.

The quote is certainly not taken out of context.

Neither the two researcher nor I ever stated anything about the following term you made up: non-monetary bartering purchasing power.

PennySeven (talk) 20:36, 6 January 2009 (UTC)

The actual practice of "purchasing" goods and services with other non-monetary goods is barter, and you alluded to it in this discussion. The valuation of purchasing power of non-monetary items (ie inventory) discussed in this paper is about Turkish financial regulations. I'm happy for the authors of the paper that it achieved some notice, but - let's not exaggerate its importance, nor the meaning of that sentence, ok? The claim has been removed from the lede on the basis that's it's trivia and thus doesn't belong there. You admit it "almost" doesn't warrant mention at all. So why is it in the lede? It's not even an accurate claim the way it's used here, because it's taken out of context. They're discussing Turkey's accounting requirements, the monetary value non-monetary items are recorded in business and personal financials. Professor marginalia (talk) 23:46, 6 January 2009 (UTC)

Let us be specific:

You stated: "The actual practice of "purchasing" goods and services with other non-monetary goods is barter, and you alluded to it in this discussion." Yes, it is. There is NO inflation in barter. Why? Because there is no money. So? Inflation is only a monetary phenomenon. It has nothing to do with non-monetary items. Inflation has no effect on non-monetary items. Inflation cannot destroy the real value of non-monetary items. Inflation has no effect on the real value of non-monetary items. The two Turkish ladies are saying exactly the same thing. They say: "Purchasing power of non monetary items does not change in spite of variation in national currency value." They say the purchasing power or real value on non-monetary items does not change with variations in the real value of the national currency. What causes variations in the real value of the national currency? Inflation. So they say that inflation has no effect on the real value of non-monetary items. Which is the same as what Friedman said. He simply said that inflation is ONLY a monetary phenomenon and can only effect or destroy the real value of money and other monetary items. That obviously also means that inflation is not a non-monetary phenomenon and that the purchasing power or real value of non-monetary items cannot be effected by inflation which is what the Turkish economist are saying: "Purchasing power of non monetary items does not change in spite of variation in national currency value." Non-monetary items are all economic items that are not monetary items. What are monetary items? Monetary items are money and items with an underlying monetary nature.

You stated: "let's not exaggerate its importance, nor the meaning of that sentence, ok?" Now we know that "that sentence" is basically saying exactly what Friedman said and we know he got the Nobel for his work. So "that sentence" is important, and we know what it means.

You stated: "The claim has been removed from the lede on the basis that's it's trivia and thus doesn't belong there." Now we know it is important because it agrees with the important Friedman statement. Thus it is not trivia. Thus it belongs there. I am sure you now agree.

You stated: "You admit it "almost" doesn't warrant mention at all." No. What I stated is "It is logical is it not: if inflation only effects money and monetary items it logically will not effect non-monetary items. It almost needs not to be stated." I did not state that the Turkish claim "almost doesn´t warrant mention at all" or whatever other "claim" you are referring to. You can see clearly what I stated.

You stated: "So why is it in the lede?" Because it is stating the same fact as stated in Friedman´s statement, namely, that inflation is only a monetary phenomenon and is thus not a non-monetary phenomenon resulting in the fact that the purchasing power of non-monetary items does not change in spite of variation in the national currency value that is destroyed by inflation.

You stated: "It's not even an accurate claim the way it's used here, because it's taken out of context." We have confirmed above that it is an accurate claim (agrees with Friedman) and that is not taken out of context because it relates directly to the Friedman statement.

You stated: "They're discussing Turkey's accounting requirements, the monetary value non-monetary items are recorded in business and personal financials" They are discussing Inflation Accounting. Friedman´s statement is about inflation.

I am sure you agree that the claim is correct, in context and relevant to inflation and should stay as proved conclusively above. PennySeven (talk) 00:32, 7 January 2009 (UTC)

Barter can be inflationary too. Under monetary arrangement, its the supply of money. It is the explosion of this supply that causes inflation. If we had only pencil and eraser in this world, an increase in supply of pencil while the supply of eraser stays constant would introduce inflation. It would probably take more pencils to buy the same amount of eraser. Thus as with the definitoin of inflation as you understand it, whereas the increase of money introduces inflation and weakens its real value, the value of pencil in terms of eraser gets weaker under our pencil-eraser universe. __earth ^(Talk) 01:11, 7 January 2009 (UTC)

That is a normal price increase under supply and demand. That does not weaken the unit of exchange in the whole economy and does not effect the medium in exchange in the whole economy and does not effect the store of wealth in the whole economy.PennySeven (talk) 06:56, 7 January 2009 (UTC)

ONLY if pencils were money in this pencil-eraser universe would it be inflationary because we would have money in this universe and it would not be a barter economy any more. Barter cannot be inflationary. You can price increases and decreases and you can have real value increases and decreases in a barter economy as the world had a long time ago, but you cannot have inflation as it relates to a medium of exchange also serving at the same time as store of wealth and unit of account. Anything can be money in an economy, as long as it is a medium of exchange, unit of account and store of wealth. This is the current definition of money.PennySeven (talk) 08:19, 7 January 2009 (UTC)

I see what you're saying, but this is not what either of the sources are even talking about. Friedman was not talking about "purchasing power of non monetary goods", and the Turkish authors were not talking about Friedman's monetarism. Friedman was talking about inflation being the result of a higher growth in the money supply than in output. The Turkish were talking specifically about a Turkish financial reporting rule which kicks in during periods of high inflation in the Turkish economy. We can't use quotes from sources to support arguments their authors weren't making. And in the lede, we don't put digressions that don't pertain to any content in the main article. Professor marginalia (talk) 15:05, 7 January 2009 (UTC)

Both you and I are wasting our time on this discussion. Vision Thing has already deleted the reference without even contributing anything to this discussion. We are thus wasting our time discussion it. If I put it back in the article, Santori Son will block my account for "edit warring". So I will not be able to get this reference back in the article no matter what arguments I come up with.

Vision Thing has already decided this discussion without taking part in this discussion. I think Visiorn Thing is a Wikipedia editor. They do not make mistakes and I do not think they will ever admit that they also make mistakes. PennySeven (talk) 21:07, 7 January 2009 (UTC)

Let´s wait and see whether Vision Thing will join us in this discussion. PennySeven (talk) 21:12, 7 January 2009 (UTC)~

Vision Thing is not a Wikipedia editor. He is a a member of the WikiProject Economics. I do not really feel like wasting my time discussing this matter since it has already been decided by Vision Thing. If I put it back after convincing you that it should be there, Santori Son will block me in any case for "edit warring". A bit of a waste of time on my part then, isn´t it?PennySeven (talk) 21:21, 7 January 2009 (UTC)

Friedman's quote should be in the lead because reasoning behind it basically redefined mainstream view on inflation. However, claim supported by that Turkish source is dubious in my view. What is "the real value"? -- Vision Thing -- 21:25, 7 January 2009 (UTC)

Vision Thing, what you are referring to has already been discussed in this section. You just have to read it. PennySeven (talk) 21:29, 7 January 2009 (UTC)

Even if we put that aside inflation effects on the real value, fact that the claim you want to introduce into the lead is objected by other editors indicates that you need a better source than paper which deals with "CHANGES IN FINANCIAL REPORTING IN TURKEY." -- Vision Thing -- 21:37, 7 January 2009 (UTC)

As explained in the discussion before: what the Turkish ladies are saying is exactly the same as what Friedman said - just stating it from the non-monetary side: Friedman said that inflation is ONLY a monetary phenomenon. Logic states then that inflation is NOT a non-monetary phenomenon. That is exactly what the Turkish economists are saying:

Inflation has no effect on the real value of non-monetary items. They translated it as follows:

"Purchasing power of non monetary items does not change in spite of variation in national currency value."

The purchasing power (real value) of a non-monetary item is expressed as a monetary value. Money´s real value is, however, being destroyed by inflaiton, thus, since the purchasing power (real value) of the non-monetary item does not change but the real value of the unit of account (money) changes as a result of inflation, then the nominal value of non-monetary items have to be inflation-adjusted to compensate for the destruction of the real value of money (unit of account) in order to keep the real value of the non-monetary item the same. The national currency is money in an economy. The national currency (money) only varies (that is: its real value only varies ) because of the fact that it is being destroyed by inflation.

The Turkish academics are thus saying: Inflation has no effect on the real value of non-monetary items which then takes us to Friedman: because inflation is always and everywhere a monetary phenomenon.

PennySeven (talk) 22:02, 7 January 2009 (UTC)

It is the two sides of the same coin.PennySeven (talk) 22:07, 7 January 2009 (UTC)

This has been recognized by the International Accounting Standards Board in 1989 in the Framework, Par. 104 (a) that is part of International Financial Reporting Standards:

The Framework, Par. 104 (a):

Financial capital maintenance can be measured in either nominal monetary units or units of constant purchasing power. [20]

Implementing Constant Purchasing Power Accounting as per the above, inflation-adjusts all constant real value non-monetary items.

The IASB and IFRS are reliable sources.PennySeven (talk) 22:15, 7 January 2009 (UTC)

I am now going to put the Turkish reference back on the article page. I will then be blocked by Santori Son or Vision Thing for "edit warring". I am sharing my mobile internet connection with my daugher at the moment. I have to take it her right now. So, by the time I get my internet connection back, the duration of my block by either Santori Son or Vision Thing hopefully would have expired already. Unless they block me indefinitely:-) But as they say back home: ´n boer maak ´n plan :-) PennySeven (talk) 22:56, 7 January 2009 (UTC)

Done. — Satori Son 13:24, 8 January 2009 (UTC)

Friedman quote

While the "Inflation is always and everywhere..." quote certainly does not belong in the lead, it is a pretty famous quote and it describes a particular view (which is actually now fairly uncontroversial as long as you append "in the long run" to it) pretty succinctly. So I think it would be fine if it was in the "Monetarist View" section or even in the sub-lead to the sub-section on causes. Also, the Keynesian View section tends to lump in various strains of Keynesian thought together, mixing the American Keynesian view (which doesn't differ all that much from the (moderate) Monetarist view in many respects) with a more European Keynesian view. It could use splitting up or clarification.radek (talk) 06:52, 14 January 2009 (UTC)

I agree that the Friedman quote does not belong in the lead when it´s logical results are rejected and there is no Friedman section in the article.

PennySeven (talk) 19:44, 16 January 2009 (UTC)

Definition of Inflation

--BSME ArmchairEconomist (talk) 23:06, 30 January 2009 (UTC) Inflation should be divided into "Man-made" and "Natural" or Nature-made. Man-made are ALL the reason mentioned in your lenghy article, but price increases caused by the depletion of natural resources is not mentioned at all. There is only a brief reference to a bad harvest or an increase in commodity prices. Why is this important? In the past the Fed has raised interest rates when prices rose because of many "Natural" inflation componets. This is like pouring oil on a fire!

See the text for core inflation, which is the usual distinction. Depletion of e.g. a natural resource would be a change in relative prices, not overall prices. But you're right that certain highly volatile (price-wise) goods are often excluded from baskets (in short or medium term) to ensure that fluctuations are not mistaken for trends in the overall price level.--Gregalton (talk) 05:40, 31 January 2009 (UTC)

Housing component of Inflation

Is the cost of housing (eg price increases over time) included in inflation reporting ? I am curious about this in relation to the housing bubble and subprime crisis 121.223.158.50 (talk) 17:17, 19 March 2009 (UTC).

Controversy surround inflation

I do not see anywhere that the controversy over the reporting of inflation is presented. Read an interesting book recently that discussed how changing criteria for calculating inflation are being used to keep inflation low. And that if these changing criteria were not used inflation in North America would be closer to 10% rather than 1-2%. The reason being that raises in wages are tied to inflation. If one keep inflation low it keeps wage changes low. Not sure if it is applicable but..--Doc James (talk · contribs · email) 18:59, 3 March 2009 (UTC)

It's hard to say what a "fair" calculation of price inflation would be; if you were to measure the inflation rate in 19-inch TV prices, for example, you'd find about a -25% annual rate. I realize manipulation of the inflation rate used to index Social Security may be of interest, but I don't think it's possible to justify calculating a rate over 6% at the present time. It still could be interesting, though. — Arthur Rubin (talk) 19:05, 3 March 2009 (UTC)

From my understanding, much of the difference between 10% instead of 2% were driven by the difference between using housing prices (as was done before the 1980's) instead of rents (as is used now). With the collapse of the housing markets, the 'old style' inflation rates should come in as massively negative now. LK (talk) 10:40, 4 March 2009 (UTC)

Inflation targets

The article says, "Most central banks are tasked with keeping the federal funds lending rate at a low level, normally to a target rate around 2% to 3% per annum, and within a targeted low inflation range, somewhere from about 2% to 6% per annum." Today an IHT article[21] confirms this by saying that the Federal Reserve has an "unofficial inflation target of nearly 2 percent."

I would like to know why zero percent is not the target. Wholesalers, and especially retailers, would spend less effort updating the prices of their products, if the average item in the "basket" changed by 0%. Needlessly changing pricetags seems like an unproductive use of labor. Am I right? If not, could an explanation be added to the article, please? GPS Pilot (talk) 01:24, 19 March 2009 (UTC)

The explanation is pretty much there already in the section "Some possibly positive effects of (moderate) inflation include:".radek (talk) 01:29, 19 March 2009 (UTC)

When I look at the "Effects" section of the article, I see seven negative effects (cost-push, hoarding, hyperinflation, allocative efficiency, shoe leather cost, menu costs, business cycles) but only four positive effects (labor-market adjustments, debt relief, room to maneuver, and Tobin effect). So based just on a count of positive vs. negative effects, this does not explain why inflation targets are greater than zero -- the negative effects seem to outweigh the positive. This remains a deficiency of the Wikipedia article. GPS Pilot (talk) 22:40, 30 March 2009 (UTC)

Hmm, interesting point. It a diminishing returns thing, clear to economists, but probably unclear to laymen. High inflation is costly, but low inflation is virtually costless, whereas deflation is potentially dangerous. Perhaps we need a section on inflation rate targetting in the article? LK (talk) 09:05, 31 March 2009 (UTC)

Should be renamed back to 'Inflation'

We've gone through this before. This page should be named 'Inflation', as that is the common understanding of the meaning of the word. People, please back me up by adding a comment, thanks.

Anyone know how to get administrator intervention to move the page back to inflation? LK (talk) 08:19, 28 March 2009 (UTC)

I'm putting in a request at Wikipedia:Requested moves. LK (talk) 08:24, 28 March 2009 (UTC)

I agree that the article should be named Inflation on the basis that it is more in line with the concept that Wikipedia is a general encyclopedia presenting what is generally accepted. I do feel that the differences in the terms Price inflation, Monetary Inflation and Inflation need a lot more analysis.

It appears to me (I am an accountant not a macroeconomist) that the current decrease in inflation as a result of the ongoing financial crisis is about prices going down in general. Someone may be able to explain that it is in fact about the money supply decreasing. That explanation would be interesting to understand - if it is so. It is a fact that inflation is always and everywhere a monetary phenomenon. Inflation has no effect on the real value of non-monetary items.

PennySeven (talk) 10:24, 28 March 2009 (UTC)

I attempted to fix this move, but it went wrong. It's very poor practice of a driveby editor to do a page move for a major article on a topic of which they clearly know nothing. We should go back to Inflation.JQ (talk) 11:17, 28 March 2009 (UTC)

I have redirected Price Inflation to InFlation. I regard this as an interim move till InFlation is correctly renamed and moved to Inflation as requested by LK (talk) above. I apologise if this is an incorrect way of fixing this problem. It is only a temporary solution.

PennySeven (talk) 11:42, 28 March 2009 (UTC)

Requested move

Note to readers. This first section is discussing returning the page name to Inflation. 199.125.109.126 (talk) 07:44, 29 March 2009 (UTC)

Administrators should reverse the driveby move by an editor who has never contributed on this topic and clearly knows nothing about it.JQ (talk) 11:29, 28 March 2009 (UTC)

Agreed Morphh ^(talk) 12:20, 28 March 2009 (UTC)

Speedy agree. The move to "Price inflation" without consultation was unjustified. The move back to the incorrectly capitalised name was reasonable, as a temporary measure, until an administrator could be found to reverse it properly. No further debate is needed. It is an uncontroversial act of housekeeping to correct the name. --DanielRigal (talk) 13:38, 28 March 2009 (UTC)

• Strong disagree. To me and to many, "inflation" without other definition often means what happens to tires and balloons and inflatable boats. Try Inflation (financial)? Anthony Appleyard (talk) 16:34, 28 March 2009 (UTC)
  • Maybe at Wiktionary but not at an encyclopedia. Having said that, one can argue whether precision or using the common name is more important here. — AjaxSmack 16:44, 28 March 2009 (UTC)

• Support an immediate move from InFlation to Inflation but also support continued discussion of final resting place. — AjaxSmack 16:44, 28 March 2009 (UTC)

• Support - a move to Inflation (financial) is acceptable if the page Inflation is a disamb page, not a page for "inflation" of balloons or tires. A move to Price inflation is very problematic. Professor marginalia (talk) 17:41, 28 March 2009 (UTC)
• I have moved it to Inflation (financial); page Inflation is now a disambig page. Anthony Appleyard (talk) 19:04, 28 March 2009 (UTC)

• Comment. Hmmmmm. I can see the logic in this but I also feel very uncomfortable that such bad behaviour by an editor has accomplished something so drastic, overriding so much previous discussion on how best to structure it. My gut feeling says we should put everything back the way it was before and then discuss it. On the other hand, that would make a lot of extra unnecessary work if we later decide that it was the right approach and had to redo it all again. If we do go down the route of having Inflation as the disambiguation page then we will need to watch it like hawks for those who hold fringe financial views trying to tweak it to make it look like Monetary Inflation is the mainstream financial/economic definition. --DanielRigal (talk) 20:20, 28 March 2009 (UTC)

I'd appreciate an explanation of how my action was "bad behaviour". It appeared to me to be an uncontroversial housekeeping measure such as I have performed several times before. False vacuum (talk) 20:36, 28 March 2009 (UTC)

I accept that you did it in good faith but you should not move an article on a major, important, mainstream subject without discussing it first. It was not uncontroversial, as you can clearly see now. Spelling mistakes and capitalisations are uncontroversial moves. My guess is that more than 90% of people who type inflation into the search box will expect to get to this article. This may not preclude the use of a disambiguation page but it should make you think twice. If you did not understand the economics or the significance of the subject you should have asked. I do not want to diminish the importance of cosmic inflation, or anything else called inflation, but when the guy reading the the News says "inflation" this is what he is talking about. You should also have checked what articles link to this one. The move has left hundreds of links that need to be disambiguated and that can't even start until we agree what the final arrangement will be. --DanielRigal (talk) 20:58, 28 March 2009 (UTC)

• Comment Further comment: Unilateral implementation by Anthony Appleyard of his preferred solution is yet more poor practice, which should not be rewarded by acquiescence. Without prejudice to the final resolution, we should restore the previous status quo while discussion proceeds.JQ (talk) 21:15, 28 March 2009 (UTC)

I agree. PennySeven (talk) 21:43, 28 March 2009 (UTC)

I also oppose a unilateral move to a title not supported by anyone else in the middle of a RM discussion. Although I (of course) AGF, at a minimum, it compromises previous discussion since it introduces a status not present at the time those comments were made. — AjaxSmack 23:48, 28 March 2009 (UTC)

• another strong disagree with restoring the previous status quo. I guess I'm the "editor[...] who clearly knows nothing about it" (whatever "it" refers to; I'll be the first to admit that I don't know much about economics, but I don't see how that is either evident from what I did or relevant to this discussion). The word "inflation" has several standard meanings (including that of cosmic inflation, which is what I was trying to read about when I discovered this situation originally, and which may not be the most common referent of the bare term "inflation", but is certainly both common among scientists and important), and I really think it is both uncontroversial and obvious that inflation should be a disambiguation page. As for what types of financial inflation there are, how they are related, and what they should be called, this is clearly a separate issue and should be handled by the economists. Although I might add, inflation (finance) would be stylistically preferable to inflation (financial). False vacuum (talk) 20:15, 28 March 2009 (UTC)

This comment and the choice of renaming supports False vacuum's statement that "I don't know much about economics". Inflation is not primarily an issue in finance but in (macro) economics. Again, it is highly unsatisfactory that editors who know nothing about the topic have taken it upon themselves to make unilateral decisions. JQ (talk) 21:25, 28 March 2009 (UTC)

Again, the "choice of renaming" was not mine. The disambiguation for inflation, which was previously located at inflate, offered "price inflation" appositively as a synonym for the type of inflation that is presumably the primary concern of economists, and price inflation was a redirect to the economic inflation article. If that was a problem, it wasn't created by me. False vacuum (talk) 22:56, 28 March 2009 (UTC)

I just realised that it may not be evident to the casual reader who did what. Thus I point out, for anyone who cares, that I moved the article to which this talk page belongs from inflation to price inflation and moved the disambiguation for "inflation", then called inflate, to inflation—or, to be more precise, I made an "uncontroversial" request that an administrator perform the latter move. I don't know who moved the article from price inflation to inflation (financial). Now, I might add that my primary motivation was aesthetic repugnance at the use of inflate as the title of the disambiguation page (what with its not even being a noun, or, therefore, the name of any of the disambiguated entities). In hindsight, I see that I could have just renamed the page inflation (disambiguation) (or at least, I could have tried it). But I did also think that the article currently called cosmic inflation (which is what I was originally after, and which I had expected to see when I typed "inflation" since that's what we physicists actually call it—I forgot about the economic kind) should be easier to find/get to. Again, in case anyone cares. False vacuum (talk) 01:19, 29 March 2009 (UTC)

• Comment As a data point, well over 90 of the top 100 Google hits on inflation refer to the economic concept. The previous situation should be restored.JQ (talk) 21:06, 28 March 2009 (UTC)

"As a data point"? ...Surely you aren't serious with this argument. False vacuum (talk) 22:56, 28 March 2009 (UTC)

• Comment As another data point, I count 2294 links (of all types) to Inflation, the vast majority of which will need to be redirected here. --DanielRigal (talk) 21:32, 28 March 2009 (UTC)

To break that down a bit more we have:

• 1643 articles
• 80 templates
• 45 potals
• 13 redirects

I know there are tools which can help, but that does not sound like a trivial undertaking to fix. --DanielRigal (talk) 21:46, 28 March 2009 (UTC)

This is interesting, but not an argument for inaccurate titling of articles. False vacuum (talk) 22:56, 28 March 2009 (UTC)

It is not an argument that the article should definitely not be moved but it should have been a major indication that a move would be highly problematic and should not be attempted lightly. I agree that if the original title was wrong then we would just have to knuckle under and fix all those links, but the original title was not wrong. It is one, in my view the most appropriate one, of the reasonable titles this article could have. --DanielRigal (talk) 00:34, 29 March 2009 (UTC)

• Support: The previous situation should be restored. Wikipedia is not a dictionary or a textbook or a scientific manual. WP:NOT PennySeven (talk) 21:40, 28 March 2009 (UTC)

A "scientific manual"? ...This is not a serious argument either, is it? False vacuum (talk) 22:56, 28 March 2009 (UTC)

• Support per WP:PRIMARYTOPIC. The primary encyclopedic use of the term is in relation to price inflation, therefore it is reasonable to assume that the majority of people looking for inflation in Wikipedia are interested in this topic. Inflation as "to inflate a balloon" is not an encyclopedic topic, but is something for wiktionary. Other uses are minor in comparison (such as Cosmic inflation). Thus I'd go with this article at Inflation, and Inflation (disambiguation) to list other terms. - Bilby (talk) 22:12, 28 March 2009 (UTC)

No, cosmic inflation is not "minor". It may be of minor importance to you, but that is an entirely different proposition. False vacuum (talk) 22:56, 28 March 2009 (UTC)

Sorry, what I meant was minor in terms of Wikipedia use, not in importance. Inflation had 154255 hits on Wikipedia for February, while Cosmic inflation had 9311, and Monetary inflation had 4124 hits. Even if we assume that every hit to Cosmic inflation and Monetary inflation is a result of going to Inflation first, the difference is considerable. - Bilby (talk) 23:05, 28 March 2009 (UTC)

• Support a move back to Inflation as it is the primary topic. Cosmic inflation or other "inflate" terms can be directed via an "otheruses" tag at the top of the article. I don't care for the current "finance" alternative, it's more general economics than finance. While I can understand that cosmic inflation may not be a minor term, it is in limited use by the general public, and this article is what the vast majority will be seeking when they enter the term. People seeking cosmic inflation will more than likely enter that term, but will likely just enter inflation to find this article. It was best the way it was and the article should be restored back to the original name. Morphh ^(talk) 23:36, 28 March 2009 (UTC)

• Comment. WP:DISAMBIGUATION actually gives inflation (economics) as a canonical example of the article-titling form where "[a] disambiguating word or phrase can be added in parentheses. The word or phrase in parentheses should be: the generic class that includes the topic, as in Mercury (element), Seal (mammal); or the subject or context to which the topic applies, as in Union (set theory), Inflation (economics)." Suggestion: How about moving this article to inflation (economics)? False vacuum (talk) 23:52, 28 March 2009 (UTC)
  • Inflation (economics) is still ambiguous because of the monetary inflation article. — AjaxSmack 00:26, 29 March 2009 (UTC)
    • Uh-oh. Inflation (economics) isn't any more ambiguous than plain inflation, is it? False vacuum (talk) 01:51, 29 March 2009 (UTC)
      • I agree. My support for plain inflation is based on it being the primary topic, i.e., I don't believe it's ambiguous. But if you don't believe that it's the primary topic then I assume you feel the meaning of "inflation" is ambiguous. If that's true, it seems you would the new article title to be unambiguous as well. — AjaxSmack 04:39, 29 March 2009 (UTC)
        • Yes, I certainly think the word "inflation" is ambiguous. Its primary encyclopedic meanings are this peculiar economic phenomenon of prices constantly going up, which I really must get around to trying to learn about someday, and the thing that we think happened at the very beginning of the universe when spacetime expanded at an exponential rate. The latter is, very conservatively, at least as important as the former, and actually is referred to as just plain "inflation" all the time. False vacuum (talk) 05:18, 29 March 2009 (UTC)
• Support Move back to Inflation per WP:PRIMARYUSAGE. --Born2cycle (talk) 07:13, 31 March 2009 (UTC)

Requested move: part 2

Please continue discussing above but since the article has now been at several different titles in the past few days, please specify specifically which location you prefer for this article. — AjaxSmack 23:43, 28 March 2009 (UTC)

Inflation

1. — AjaxSmack 23:43, 28 March 2009 (UTC) at least until convincing counterarguments are given.
2. Morphh ^(talk) 23:47, 28 March 2009 (UTC) - WP:PRIMARYTOPIC
3. PennySeven (talk) 23:58, 28 March 2009 (UTC) WP:PRIMARYTOPIC
4. --DanielRigal (talk) 00:28, 29 March 2009 (UTC) WP:PRIMARYTOPIC plus the complexity and effort required to fix the many hundreds of links if it is not here.
5. Bilby (talk) 00:35, 29 March 2009 (UTC) - based on apparent demand and the above.
6. JQ (talk) 00:55, 29 March 2009 (UTC) Above, plus undesirability of rewarding unilateral action against consensus
7. 199.125.109.126 (talk) 03:38, 29 March 2009 (UTC) Absurd case of WP:PRIMARYTOPIC (this article gets 150,000 page views/month, the other two inflation articles 9,000 and 4,000 per month). Request speedy close, and move the dis page to Inflation (disambiguation).
   •  Done OK, OK, I have put these 2 pages back in Inflation and Inflation (disambiguation). Anthony Appleyard (talk) 05:26, 29 March 2009 (UTC)
8. Support the move back to 'Inflation'. 08:29 to 08:51, 29 March 2009 User:Lawrencekhoo
9. Support the move back to "Inflation". (The article should have a {{for}} for Cosmic inflation, and possibly for inflate.) — Arthur Rubin (talk) 19:46, 29 March 2009 (UTC)
10. Support move back to Inflation. Other uses much less common. Per WP:PRIMARYTOPIC. --Born2cycle (talk) 07:13, 31 March 2009 (UTC)

Inflation (economics)

See my comment/suggestion above. False vacuum (talk) 23:52, 28 March 2009 (UTC)

I'd like to take this opportunity to point out that the concept of "rewarding unilateral action against consensus" invoked above is completely irrelevant to figuring out what state the articles should end up in, and it's not terribly impressive that this implicit ad hominem attack is still being used. Surely everyone's had long enough to cool off by now. To clarify: That article Y is currently located at address X (or even that it has been located there for a while) is not considered to constitute a "consensus" that that is where it belongs. False vacuum (talk) 01:33, 29 March 2009 (UTC)

It's also amusing that three of the posts in favor of restoring the status quo link to a Wikipedia policy page that contains implicit support for my position. I strongly recommend that anyone interested in this argument follow that link and read the page. Of course, the first sentence of the section Is there a primary topic?, sadly, could be interpreted to mean that counting google hits is a valid method for deciding such matters. But it is followed shortly by the sentence: "If there is extended discussion about which article truly is the primary topic, that may be a sign that there is in fact no primary topic, and that the disambiguation page should be located at the plain title with no "(disambiguation)"." My objections here do not yet constitute "extended discussion", despite their verbosity, but such is in my opinion likely to occur if this argument were to become widely known. False vacuum (talk) 01:42, 29 March 2009 (UTC)

I agree that the object should be determining the final "state the articles should end up in" and that the status quo ante is not per se consensus of anything (although extended existence at a single title is often interpreted as such). I am also not in favour of using Google hits to determine the page location. However, I have yet to see any affirmative reasons why the page should be moved from inflation to another location. The mere existence of inflatable boats doesn't hack it. — AjaxSmack 04:45, 29 March 2009 (UTC)

No no, cosmic inflation is the other important thing that's called (simply) "inflation" (all the time by people who think about this sort of thing, I assure you). False vacuum (talk) 05:06, 29 March 2009 (UTC)

That's a start. What, other than your assurance, can I go on that the term inflation is ambiguous to a general audience (Wikipedia is not only a reference only for "people who think about this sort of thing"). I call my toilet/bathroom the head, the library, and the throne room without qualification but I don't consider any of these terms to be encyclopedically ambiguous. — AjaxSmack 05:14, 29 March 2009 (UTC)

Well, this, for example. And as for "people who think about this sort of thing", absolutely anyone is welcome to and certainly should. False vacuum (talk) 05:30, 29 March 2009 (UTC)

Just to back up what False vacuum is saying: the single word "inflation" in physics and cosmology refers what is described in the current cosmic inflation article. There is a consensus over there that we need to change the title to "inflation (cosmology)" or "inflation (physics)" since within the field (and increasingly in the popular literature such as New Scientist) this is referred to as just "inflation". --Michael C. Price ^talk 07:34, 29 March 2009 (UTC)

Another confirmation of this. As for some random data confirming this, the preprint [www.arxiv.org arXiv] counts in the last year 454 articles referring to inflation in their abstract. (referring to the cosmological term in almost all cases) Of these only 5 use the phrase "cosmic inflation". This shows: 1) inflation is a very important subject in modern physics 2)it is almost always referred to as simply "inflation".—Preceding unsigned comment added by TimothyRias (talk • contribs)

That's fine. I am sure you are correct and nobody is trying to say that cosmic inflation is not important. The difference between the terms is that the use of the term within physics is largely confined to physics whereas the mainstream economic usage is in everyday use among the general population. It isn't about importance but about prevalence. When the guy on the News says "inflation" he means general price rises.
Lets do a thought experiment: Imagine we stop 1000 people in the street (50 each in 20 towns in various English speaking countries). Lets ask each of them "What do you think about inflation?". What proportion will answer assuming you mean general price rises and what proportion will answer assuming that you mean cosmic inflation? Even if you pick up a Physics professor in that random sample he is likely to ask for clarification of the question rather than answer assuming that the question refers to cosmic inflation.
--DanielRigal (talk) 08:58, 30 March 2009 (UTC)

I'm happy with the current link to the physics article in the intro to this one, as long as Inflation goes where people expect. Apologies to all for getting heated - partly as a result of messing things up when I originally tried to revert the move. In particular, False vacuum, while I hope you've learned that you can be too bold in changing things that have been discussed for a long time, I can see that you are genuinely trying to improve Wikipedia, and hope you won't be discouraged by this. JQ (talk) 09:05, 30 March 2009 (UTC)

I am reminded of the Bill Cosby sketch, Why is there air? To blow up basketballs. I have to say that the number of people on the planet who are aware of cosmological inflation could fit in one room. Making a direct link to the topic in a hatnote seems completely unnecessary, as it can be readily found from inflation (disambiguation). You will note that there was initial surprise by some that blowing up basketballs, and other similar inflation was not in fact the primary topic, until they learned that it is only a wikt primary use, not wp. 199.125.109.126 (talk) 16:29, 30 March 2009 (UTC)

Fit all in one room?

Well, having participated in organizing the 1979 IAU (International Astronomical Union) meeting in Montreal, I'd state that the number of people for whom the word "inflation" has primarily a cosmological meaning and only secondarily a financial/economical/monetary meaning was already in the hundreds of thousands at the time and has been steadily growing ever since. So, no, one can't fit all these astronomers, cosmologists, astrophysicists, theoretical physicists and geometrodynamicists in a single room, even through they indeed are a minority on this planet. But then, the users of the english wikipedia are also just another minority on this planet.  ;) Norman.

Requested move: part 3

Now that the page has been suddenly moved again before anyone who wasn't already hanging around got a chance to participate, I hereby create this section for the coming tide of comments agreeing with me that inflation should be a disambiguation page (primarily because of cosmic inflation, which is virtually always called simply "inflation", and is conservatively at least as important as economic inflation). Meanwhile, I'll go and fix the disambiguation page. False vacuum (talk) 06:09, 29 March 2009 (UTC)

Recombined into one section. The chronology was that a very stable article was moved because someone was having trouble finding a similar named article, and an RM opened to move it back, with the request that in the meantime it be restored to the original name. That has now been done. The template at the top has also been updated to reflect the actual move request, which is the move that was done and then reverted (through several odd names, such as "InFlation" and "Inflation (financial))". Moves can be discussed all day long, but they should not interfere with the operation of the encyclopedia, either by edit warring, or making controversial moves without discussion. 199.125.109.126 (talk) 06:46, 29 March 2009 (UTC)

• Strongly oppose any move from the current status quo. Most people (except physicists) use the term 'inflation' to refer to a rise in prices. I've just gone thorough the first 50 google hits for 'inflation', and 46 refer to price inflation, the other 4 to cosmic inflation. Also, there are more than 2300 internal links the topic 'Inflation', as opposed to less than 400 for 'Cosmic inflation'. In such a case, the current practice on Wikipedia is to have the more commonly used meaning occupy the main article space, with a disambiguation to the less used term at the top of the page (c.f. Obama and Obama, Fukui a city in Japan that used to occupy that space). From WP:PRIMARYTOPIC. "When there is a well-known primary topic for an ambiguous term, name or phrase, ... then that term or phrase should either be used for the title of the article on that topic or redirect to that article." --LK (talk) 08:42, 29 March 2009 (UTC)

Stongly oppose any move that inflation should be a disambiguation page. It is generally accepted that the term inflation refers to the destruction of the real value of money over time which results in an increase in the general price level - or vice versa.PennySeven (talk) 09:10, 29 March 2009 (UTC)

• Oppose making Inflation a disambiguation page. We have a clear and prominent link to the disambiguation page at the top of the article. Anybody getting here by mistake will quickly be on their way to the article they actually want. Nobody is going to be held up by more than a few seconds. There is no problem here that needs fixing. --DanielRigal (talk) 12:46, 29 March 2009 (UTC)

• Oppose. Economic inflation is much much better-known than astrophysics inflation. People who go to this page are very likely looking for the economics term, and that's what they find. The few people looking for the physics term will click the link at the top and find the right page. No big deal. And I'm a physicist, for the record. --Steve (talk) 07:12, 30 March 2009 (UTC)
• Oppose – I agree with the above arguments. Cosmological inflation tends to be an obscure subject for people who are not astronomy buffs, while price inflation is a widely known phenomenon.—130.76.32.181 (talk) 18:43, 30 March 2009 (UTC)
• Oppose cosmic inflation is not as common as economic inflation in everyday life, since economic inflation is always in the everyday news, while cosmic inflation rarely is. 76.66.193.69 (talk) 04:21, 31 March 2009 (UTC)

Inflation (a price increase) as a separate article

It is generally accepted that the term inflation can be used and is generally used to mean simply a price increase in a single group of products, e.g. house price inflation. All the different items in the CPI basket are described with terms like food inflation, fuel inflation, energy inflation, etc.

How should this be included in Wikipedia?

In either:

a) an article on its own like the articles on Price inflation (the main article) and Monetary inflation? or

b) as a sub-section of the main article on price inflation?

PennySeven (talk) 14:02, 29 March 2009 (UTC)

Should it be included in the ambiguation page?

It is a price increase that is called inflation but it is not a general price increase.

PennySeven (talk) 14:12, 29 March 2009 (UTC)

Since "this article is about a general rise in the level of prices" a seperate article should be created for Inflation (a price increase)

Is there any support for this idea? It has to be dealt with since it is a generally accepted practice in financial reporting.

PennySeven (talk) 14:22, 29 March 2009 (UTC)

I think for the moment this could be addressed in Inflation. We have a separate article on Asset price inflation (I changed the name to this, which is more standard) and we may want one for food (price) inflation in due course.JQ (talk) 19:37, 29 March 2009 (UTC)

And then another separate article for house price inflation and another separate article for energy price inflation, etc with separate articles for all the specific product or product group price increases?

Obviously not. There is a generally accepted practice in the media and at central banks like the Bank of England to write and speak about especially house price inflation where the word inflation simply means a product or product group price increase - not an increase in the general price level. I think there should be a separate article just for inflation (a price increase). PennySeven (talk) 10:06, 4 April 2009 (UTC)

Every single sub-section in the make-up of the Consumer Price Index is described in all the world´s detailed CPI reports as sub-group inflation where it simply means the average price increase of that product of product group. It is an indisputable fact that the use of the word inflation in those instances does not mean a general price level increase . PennySeven (talk) 10:19, 4 April 2009 (UTC)

I have started the stubb: Inflation (a price increase). PennySeven (talk) 10:52, 4 April 2009 (UTC)

• Oppose: I strongly oppose the merger of Inflation (a price increase) with the Inflation article. Inflation (a price increase) is about the increase in the price of a specific product or product group while Inflation is about an increase in the general price level. PennySeven (talk) 08:15, 5 April 2009 (UTC)

Since the article Asset price inflation already exists, I suggest that it should be merged with Inflation (a price increase).PennySeven (talk) 08:29, 5 April 2009 (UTC)

It is a fact that the two concepts Inflation - an increase in the general price level - and Inflation (a price increase) - an increase in the price or average price of a product or product group - are two different concepts. PennySeven (talk) 08:36, 5 April 2009 (UTC)

This is exactly the point to keep these concepts together to avoid WP:POVFORK. Beagel (talk) 08:58, 5 April 2009 (UTC)

It seems to me that you think Inflation (a price increase) was deliberately created to avoid neutral point of view. I will remove it and leave Asset price inflation as I found it which will remedy your concern about my imagined POV. I do not have a POV. I quoted Federal Reserve Bank and Bank of England references. PennySeven (talk) 09:18, 5 April 2009 (UTC)

I suppose it is thus better to merge Inflation (a price increase) with Asset price inflation and remove Inflation (a price increase) . I don´t know how exactly that is done. Do I delete Inflation (a price increase) manually and add the content manually in Asset price inflation or is this done with a merge tool here in Wikipedia?PennySeven (talk) 09:26, 5 April 2009 (UTC)

Or vice versa: Inflation (a price increase) can also be merged into Asset price inflation because it is the same concept. At the same time Asset price inflation can be improved in general with references and so on. Asset price inflation may be a better title than Inflation (a price increase). Asset price inflation is already a term used in the media. PennySeven (talk) 08:53, 5 April 2009 (UTC)

I have removed the article Inflation (a price increase) to avoid WP:POVFORK with Asset price inflation. I had no intention to duplicate the Asset price inflation article. It was an unintentional mistake. I apologise. PennySeven (talk) 09:35, 5 April 2009 (UTC)

Why does this happen?

If people have more money and credit do all the capitalists suddenly decide "hey, let's charge higher prices because we think the consumers have more money" and a chain reaction ensues? Supply and demand may not cause inflation but it sure makes the effects a hell of a lot worse. 199.117.69.8 (talk) 18:58, 5 May 2009 (UTC)

This is perhaps the least comprehensible thing I have ever read. —Preceding unsigned comment added by 128.143.1.75 (talk) 03:49, 11 May 2009 (UTC)

Inflation has no benefits

Agree, almost 100%. Inflation is and should be defined as an increase in the money supply, while increased prices is a general consequence of inflation.

I disagree when you say hoarding is bad. First of all, who gets to define where savings ends and hoarding begins? More importantly, hoarding cash simply represents an increased demand for cash which will make it more valuable and thus increase its purchasing power. Hoarding durable goods doesn't create shortages because it's a natural change in the supply-demand curve and is a signal to smart capital-investors to divert some capital into the manufacture of the particular good. That is, hoarding is a fluctuation of the market, not a distortion of it. True, there will be a small transition period, but in a free market, the supply and demand (price) will naturally settle on a new point.

I would add that inflation is bad because it wipes out the middle class. The people who get the inflated currency first (the bankers and corporations) are the ones that win, because they can spend extra dollars at original prices. As the new money trickles down, prices increase, and by the time it reaches the middle class, they're spending new money at increased prices, i.e., they lose.

Finally, many (rightly so, I think) consider inflation to be fraudulent, because the central banks is effectively giving you dollars that aren't backed by anything; they don't represent a claim to any commodity. This is obviously related to fiat currency, which goes hand-in-hand with fractional reserve banking. I think we all need to take a careful look at Rothbard's "What Has Government Done to Our Money?" It is a very simple and stimulating read. —Preceding unsigned comment added by 140.180.174.115 (talk) 14:14, 20 June 2009 (UTC)

Something funny happened

Admin Graham87 did some funny move things that I don't understand. But as far as I can tell, nothing has changed, so let's not worry about it. LK (talk) 14:05, 20 June 2009 (UTC)

Predicting Inflation

Predicting inflation is difficult, so much so that simply using the latest historic figure provides an estimate that is as good as most "real" predictions.

Having said that, factors that economists use in inflation predictions include; gdp growth rate, unemployment rate, house price inflation, money supply growth, exchange rate changes. Increases in these (decreases in unemployment and exchange rate) may indicate upwards pressure on inflation and suggest a higher prediction.

Investor mark (talk) 21:13, 12 July 2009 (UTC)

Is there an article question or suggestion here? Morphh ^(talk) 23:42, 12 July 2009 (UTC)

Real Interest Rate Calculation

Real interest rate calculation (R = n - i) is incorrect. This formula approximates the correct answer as long as both the nominal interest rate and the inflation rate are small (i.e. between around +/-10%) but never gives an exact answer and is a poor approximation with a larger n or i.

The correct equation is R = n/i where R, n and i are expressed as decimal (e.g. 1.2 for +20%, 0.8 for -20%).

Proof:
Consider basket of goods initially costs b and a consumer initially has a principal of p. The consumer has a purchasing power of p/b1 (i.e. they can buy p/b1 baskets). After one time period where the nominal interest rate is n per period and the inflation rate is i per period, the basket will cost b1*i and the consumer will have p*n. Therefore, the consumer's new purchasing power is (p*n)/(b1*i). The real interest rate is the ratio of the new to the old purchasing power. That is R = [(p*n)/(b1*i)]/[p/b1] = n/i.

Example:
A basket costs $50 (b1 = 50). A consumer has $150 (p = 150). The consumer's initial purchasing power is p/b1 = 150/50 = 3 (i.e. they can buy 3 baskets). After a period with 20% nominal interest (n = 1.2) and 10% inflation (i = 1.1), the consumer has p*n = 150*1.2 = $180 and the basket costs b1*i = 50*1.1 = $55. The consumer can now buy 180/55 = 3.27 baskets. Their purchasing power has increased by 3.27/3 = 1.09 (i.e. R = 1.09 or 9% on top of their principal). This could be calculated as R = n/i = 1.2/1.1 = 1.09. This is somewhat different to what R = n - i calculates (20% - 10% = 10%).

Error in R = n - i:
For n = 5%, i = 3%: R = n - i = 2%. R = n/i = 1.05/1.03 = 1.0194 (1.94%) --- Slight difference
For n = 50%, i = 30%: R = n - i = 20%. R = n/i = 1.5/1.3 = 1.154 (15.4%) --- Large difference

130.216.215.193 (talk) 02:44, 16 July 2009 (UTC)

This is of course, correct. However, the simple rule of thumb that R = n - i is often used to quickly and easily estimate the real interest rate. LK (talk) 07:13, 16 July 2009 (UTC)

Destabilizing the unit of account?

"Destabilizing the unit of account" is not a mainstream term when describing inflation and its effect on the unit of account. I don´t think I have seen it used like that before.

Basically, the unit of account is never as in almost never ever stable. It is only stable during the very rare months of 0% monthly inflation. That must be a handfull over the last 100 years for most currencies.

0% annual average inflation rates must be difficult to find in history.

Another way of looking at it is the following: the unit of account is 99.999999999999999999999999% of the time not stable. It is just about 100% of the time unstable.

So, it is not really an item that is mostly stable and sometimes gets destabilized by inflation. It is almost 100% of the time not stable.

I think it is better to say: unstable unit of account because that is its normal state: unstable. PennySeven (talk) 02:44, 18 July 2009 (UTC)

Positive effects include a mitigation of economic recessions,

Below is a copy of P56 as referred to in the reference for the above statement.[22] What exactly on P56 backs up the statement: "Positive effects (of inflation) include a mitigation of economic recessions"?

"Why the apparent failure of economists to consider the tax transfers resulting from inflation? Partially I suspect a holdover from the days when Keynesians still believed that there was a long-run trade off between inflation and unemployment. They therefore tended to minimize inflation’s costs. This was exemplified as recently as 1987 in Alan Blinder’s popular book, Hard Heads, Soft Hearts: Tough-Minded Economics for a Just Society (1987, 51). “I am forced to conclude,” he wrote, “that inflations’ most devout enemies exhibit verbal hysteria.” The losses from inflation “appear to be quite modest—more like a bad cold than a cancer. . . . As rational individuals, we do not volunteer for a lobotomy to cure a head cold. Yet, as a collectivity, we routinely prescribe the economic equivalent of a lobotomy (high unemployment) as a cure for the inflationary cold.” Today, as Feldstein (1997, 123) points out, “[t]here is now widespread agreement in the economics profession that ‘high’ rates of inflation have significant adverse consequences and that these adverse effects justify the [temporary] sacrifices in employment and output that are generally needed to reduce inflation.” But he hastily adds that “[t]here is . . . much less professional support for the goal of ‘price stability’.” Most macroeconomists now favor a low but still positive rate of inflation. Partly this reflects fears of unanticipated deflationary shocks. But primarily—as attested by the Taylor Rule, essentially a nominal GDP target—macroeconomists still believe that central banks have some role to play in dampening fluctuations in output and unemployment. And central banks can play that role more safely if the trend rate of inflation gives them room for tightening money growth without inducing any price declines. Even the public finance literature, which quite openly recognizes seigniorage as a tax, reinforces the tendency among economists to ignore the loss to the public. Having become obsessed with determining the least inefficient mix of seigniorage and other taxes, much of this literature verges toward viewing seigniorage as a net benefit, because it allegedly reduces distortions from other taxes. Inflation, claims McCallum (1989, 129), just to cite one instance, “provides a benefit in the form of reduced tax collection.”7 Although the assumption that government expenditures remain fixed may be the proper approach for some economic questions, it clearly does not illuminate public objections to taxation. In the final analysis, the public may indeed overestimate the costs of inflation, even after counting their losses through seigniorage and other transfers to government. Yet macroeconomists are guilty of"

PennySeven (talk) 18:25, 18 July 2009 (UTC)

These sentences: "Most macroeconomists now favor a low but still positive rate of inflation. Partly this reflects fears of unanticipated deflationary shocks. But primarily—as attested by the Taylor Rule, essentially a nominal GDP target—macroeconomists still believe that central banks have some role to play in dampening fluctuations in output and unemployment. And central banks can play that role more safely if the trend rate of inflation gives them room for tightening money growth without inducing any price declines."

A positive inflation rate allows central banks to mitigate economic fluctuations (business cycles). Specifically, it avoids the situation of a 'liquidity trap', where monetary policy can no longer affect the macroeconomy. This is explained later in the lead, and in more detail in the article body itself. You can also look at the pages monetary policy and liquidity trap.

I've also added this reference that is more directly about liquidity traps: "Escaping from a Liquidity Trap and Deflation: The Foolproof Way and Others" Lars E.O. Svensson, Journal of Economic Perspectives, Volume 17, Issue 4 Fall 2003, p145-166

LK (talk) 18:48, 18 July 2009 (UTC)

Thank you. PennySeven (talk) 18:54, 18 July 2009 (UTC)

Inflation, the true, and simple Definition.

Inflation "An increase in the amount of currency in circulation, resulting in a relatively sharp and sudden fall in its value and a rise in prices," Websters New Twentieth Century Unabridged Dictionary of the English Language, 1957 .

All that opening line and the following "Gobbly Gook" is just that, "Gobbly Gook". The "rise in the general level of prices of goods and services in an economy over a period of time.", has nothing to due with the True Definition of Inflation. The whole first paragraph should be replaced with the definition listed from the source I just Quoted, Period. Have a Better Day. UBUIBIOK (talk) 06:14, 27 January 2009 (UTC)

For the sake of parsimony (as well as strict honesty), I agree. The phenomenon of price inflation is a common consequence of inflation as such, which is a currency-related phenomenon seen generally in an economy. "Price inflation" is a more limited concept, and is more precisely descriptive of what happens as the result of labile demand crazes or supply shortfalls (real or perceived), and looks to warrant its own Wikipedia page. Confusing the two phenomena simply perpetuates the falsehood that inflation is merely "a rise in the general level of prices of goods and services in an economy over a period of time" when such a rise in the general level of prices does not happen in the absence of currency inflation. —Preceding unsigned comment added by 71.125.142.8 (talk) 20:02, 23 March 2009 (UTC)

I have made a change to the definition to more clearly emphasize this, as I think the article is misleading as to the real causes of inflation, and it's effects on the economy. I have tried to make the change, however it was reverted by Ohnoitsjamie with only the comment "take it to the talk page". The reasons are more than enough to show what inflation really is, not just it's effects, but also it's root cause.

As further criticism, I would like to add that the negative effects of inflation are clear, but the positive effects seems lacking in substance:

* Labor-market adjustments: they're saying that inflation is good because employers tend not to want to cut salaries and inflation makes it easier on them. This is just silly, constantly lowering the real income of every single person in the country because some of them might need to get a salary cut and the employers wouldn't want to do it is a really weak argument.

* Debt relief: this one invalidates itself by saying "Banks and other lenders adjust for this inflation risk either by including an inflation premium in the costs of lending the money by creating a higher initial stated interest rate or by setting the interest at a variable rate." If the banks adjust for inflation anyway, where is the debt relief?

* Tobin effect: "To avoid inflation, investors would switch from holding their assets as money (or a similar, susceptible to inflation, form) to investing in real capital projects." What really happens is, to avoid inflation, people resort to Hoarding, one of the negative effects of inflation.

* Room to maneuver: I don't know enough to comment effectively on this one, however it seems to advocate federal intrusion into the open market as a good thing, which I would disagree with.

Manixrock (talk) 22:05, 26 May 2009 (UTC)

The article already shows that the definition of inflation has changed over time, the lead should define inflation as it is defined today, not 50 years ago. Per Merriam-Webster's online dictionary, which uses the printed 11th edition of Merriam-Webster's Collegiate Dictionary, inflation is "a continuing rise in the general price level usually attributed to an increase in the volume of money and credit relative to available goods and services."[23] The 1957 source is outdated for this article. -- EGeek (talk) 22:53, 20 July 2009 (UTC)

World Inflation rate 2007.PNG

It is too outdated in this current economic situation. It should be refreshed and updated with new colours. 88.105.105.100 (talk) 10:48, 19 July 2009 (UTC)

Too technical

I am thinking about adding {{technical}} to the article or to this talkpage. It may seem too technical. Please sort this out. 88.105.105.100 (talk) 10:53, 19 July 2009 (UTC)

Before adding the template, could you describe what you find too technical? I'll try to fix it. LK (talk) 16:58, 19 July 2009 (UTC)

Origin of term

I would be curious to see some discussion of the origin of the term "inflation" in the monetary sense. Who coined (heh) the term, etc. —Preceding unsigned comment added by 128.227.48.133 (talk) 16:58, 21 July 2009 (UTC)

I think this belongs here on the Inflation article talk page.

Inflation (again)

I've just noticed what you have been doing on the Inflation page this last few weeks. I'm here to inform you first, but it's my intention to change back many of the things you have changed. You should know that many of the revisions you've made :

1. Are against consensus. Many editors have reverted similar edits by you before.
2. Violates neutral wording, which is a basic policy for Wikipedia.
3. Is not consistent with proper weight - it overemphasizes issues not mentioned in a standard textbook presentation on inflation.

I'm going to ask that you do not edit war with me on this. The outcome eventually will not be much different, but it will cause much wikidrama if I have to call in the members of Wikiproject Economics to review the article.

thanks, LK (talk) 13:43, 20 October 2009 (UTC)

I think this belongs here on the Inflation article talk page.PennySeven (talk) 13:55, 20 October 2009 (UTC)

Consensus: you seem to be the only one disagreeing on all of the edits.

Neutral wording: I refer you to my advice on the talk page that I am going to change erode to destroy. Only you disagree with everything.

Please note: Wikipedia is not a textbook.

I am not going to edit war with you or anyone. I am very much offended that you use that term.

I am also very much offended that you start this discussion immediately threatening wikidrama.

I am very much offended that you use the term wikidrama.

I am fully willing to dicuss this in normal terms: not using terms like edit war and wikidrama.

I also request you not to threaten me. I am very much offended with your threat.

PennySeven (talk) 14:08, 20 October 2009 (UTC)

I request that you confirm and state that I am not in an edit war with you or anyone.

I request that you confirm and state that I have simply edited this article without any drama till you intervened

PennySeven (talk) 14:11, 20 October 2009 (UTC)

I wish to state very clearly that I a very offended in the way you are grossly abusing me. PennySeven (talk) 14:23, 20 October 2009 (UTC)

I object very strongly to any more threats or false accusations from you.PennySeven (talk) 14:26, 20 October 2009 (UTC)

I ask you politely not to threaten me again.PennySeven (talk) 14:27, 20 October 2009 (UTC)

I wish to state that I have not reverted or deleted one of your edits regarding this matter. Please prove me wrong. If you can not, then please retract your nuances that I am about to edit war with you. I request that specifically.PennySeven (talk) 14:44, 20 October 2009 (UTC)

Please also confirm that you fully agree that disagreement is not automatically edit war.PennySeven (talk) 14:54, 20 October 2009 (UTC)

I did not mean to imply that any edit warring has yet taken place. I wanted to discuss with you first privately to avoid exactly the sort of drama now on-going. I confirm that you have not edit warred with me over this issue (since I have not yet made any edits). That Wikipedia is not a textbook is not an excuse to have it read non-neutrally with weights not consistent with the best academic sources (ie. university published books and peer reviewed journals). Textbooks, handbooks and other encyclopedia are good reference guides as to what is appropriate in an article. I will now revert to the consensus version of the lead with neutral language from a few weeks ago. I would appreciate it if you do not revert back. Thank you, LK (talk) 15:20, 20 October 2009 (UTC)

“The study of money, above all other fields in economics, is one in which complexity is used to disguise truth or to evade truth, not to reveal it.”

John Kenneth Galbraith , economist, author, Money: Whence it came, where it went - 1975, p15

I do not think Wikipdia should be part of the crime of disguising the truth by making things complex. Wikipedia is by the people for the people, and should explain things simply so everyone can understand. Inflation is one of those issues that needs to be explained simple. Many text books says inflation is rising prices, but it does not make sense that the price of an icecream in Portland should rise at the same rate as a loaf of bread in Washington for any other reason then an increase in the money supply causing more money to chase the same amount of goods, forcing the market to raise prices. An increase in the money supply is therefore the simplest and most direct definition that does not try to pass blame from the people who control the money supply.--92.235.234.50 (talk) 17:15, 20 October 2009 (UTC)

Disputed statement

"Increases in the price level (inflation) erodes the real value of money (the functional currency) and other items with an underlying monetary nature, that are priced in terms of money (e.g. loans, bonds, fixed pension payments). However, inflation has no effect on the real value of non-monetary items, items without a fixed price in terms of money (e.g. goods and commodities, like cars, gold, real estate)."

The above two statements from the article text contain completely false and untrue items which cannot be corrected because their correction would be labelled edit warring by Lawrencekhoo. He has stated: "I would appreciate it if you do not revert back. Thank you, LK (talk)"

So, they cannot be corrected. It will be called edit warring. So, there is nothing we can do about it. They have to stay wrong in the article. I am not going to beg Lawrencekhoo or ask his special permission to allow me to correct these blatantly wrong items. I have had enough of his abuse.PennySeven (talk) 19:14, 20 October 2009 (UTC)

I propose that the term erode as it relates to inflation should be changed to destroy in the article.

The following discussion is closed. Please do not modify it. Subsequent comments should be made on the appropriate discussion page. No further edits should be made to this discussion.

---

Rejected - this lacks consensus
The following discussion has been closed. Please do not modify it.
I propose that the term erode as it relates to inflation should be changed to destroy in the article. PennySeven (talk) 16:53, 10 October 2009 (UTC) The Board of Governors of the Federal Reserve System High inflation can destroy an economy and result in enormous hardship for everyone involved. [24] Federal Reserve Bank of St. Louis We might begin by asking ourselves, "Is inflation really such a threat? Can it actually destroy us?" [25] BNP Paribas However, rising inflation combined with decreasing economic activity will destroy asset values. [26] Citibank Inflation destroys value. [27] Washington Post By problem, he means rising prices that destroy the value of money. [28] Asian Times Hyperinflation is fatal because hedging against it causes market failures to destroy wealth. Normally, when markets are functioning, unhedged inflation favors debtors by reducing the value of liabilities they owe to creditors. Instead of destroying wealth, unhedged inflation merely transfers wealth from creditors to debtors. [29] The Free Library Inflation destroys the value of money and hence of savings accounts. [30] Inflation destroys consumption. [31] How Inflation Will Destroy Home Owners Equity. [32] Don’t Let Inflation Destroy the Benefits of your Long Term Care Insurance. [33] Don't Let Inflation Destroy Your Pension. [34] How inflation destroys wealth. [35] However, inflation destroys this process. Inflation destroys real wage levels, i.e. productive capability. It favors those who have large debts, and it destroys the value of accumulated assets. It is unjust. Those who have over-borrowed see their debts effectively forgiven. Those who were prudent and have saved see their assets destroyed. [36] This is nothing short of an express policy to destroy our money by inflation. [37] PennySeven (talk) 16:52, 10 October 2009 (UTC) I propose - again - that the term erode as it relates to inflation should be changed to destroy in the article. The Board of Governors of the Federal Reserve System High inflation can destroy an economy and result in enormous hardship for everyone involved. [38] Federal Reserve Bank of St. Louis We might begin by asking ourselves, "Is inflation really such a threat? Can it actually destroy us?" [39] BNP Paribas However, rising inflation combined with decreasing economic activity will destroy asset values. [40] Citibank Inflation destroys value. [41] Washington Post By problem, he means rising prices that destroy the value of money. [42] Asian Times Hyperinflation is fatal because hedging against it causes market failures to destroy wealth. Normally, when markets are functioning, unhedged inflation favors debtors by reducing the value of liabilities they owe to creditors. Instead of destroying wealth, unhedged inflation merely transfers wealth from creditors to debtors. [43] The Free Library Inflation destroys the value of money and hence of savings accounts. [44] Inflation destroys consumption. [45] How Inflation Will Destroy Home Owners Equity. [46] Don’t Let Inflation Destroy the Benefits of your Long Term Care Insurance. [47] Don't Let Inflation Destroy Your Pension. [48] How inflation destroys wealth. [49] However, inflation destroys this process. Inflation destroys real wage levels, i.e. productive capability. It favors those who have large debts, and it destroys the value of accumulated assets. It is unjust. Those who have over-borrowed see their debts effectively forgiven. Those who were prudent and have saved see their assets destroyed. [50] This is nothing short of an express policy to destroy our money by inflation. [51] PennySeven (talk) 19:48, 20 October 2009 (UTC) Several of those clearly refer to destroying something other than the value of money, and several are ambiguous. CRETOG8(t/c) 20:01, 20 October 2009 (UTC) Technically I simply said change the word erode to destroy as far as inflation is concerned. You agree that the word used is destroy and not erode.PennySeven (talk) 20:11, 20 October 2009 (UTC) Erode is the same as destroy. Destroy is more forceful - more to the point: we all know what destroy means.PennySeven (talk) 20:14, 20 October 2009 (UTC) I am also 100% sure that you will agree that discussing the matter is not edit warring - the very abused term on Wikipedia. PennySeven (talk) 20:16, 20 October 2009 (UTC) Zimbabwe´s ZimDollar´s real value has completely disappeared. There is no ZimDollar today. Shall we say that the ZimDollar´s real value has just been a little bit eroded by billions of percent of hyperinflation or has it been completely destroyed?PennySeven (talk) 20:29, 20 October 2009 (UTC) A number of those on the list are not reliable sources, many being self published sources. But that aside, the first quote shows the problem here: "High inflation can destroy an economy and result in enormous hardship for everyone involved." The key word is "can" rather than destroy - yes, this is a possibility, but to then say that this can be used to support does destroy, as your edits to the article stated, is a problem. A better description would be "inflation erodes the value of money, and can destroy an economy". At any rate, a quick search on Google seems to come up with an awful lot of articles using "erodes" instead of "destroys", leading to the suggestion that there may be a bit of cherry picking going on here. I'd rather stick to the wording from texts and peer-reviewed papers, given the dispute. - Bilby (talk) 21:46, 20 October 2009 (UTC) May I ask whether you agree that erode and destroy is the same thing? When something is eroded it is exactly the same as being destroyed. There is no difference. When 10% of something is eroded it means that 10% of that item has been destroyed. Do you agree on that? Or do you feel there is a difference?PennySeven (talk) 22:11, 20 October 2009 (UTC) With inflation there is no doubt that it actually destroys real value. It is not a case that it can. It destroys real value. It is not a case that maybe it can. There is no maybe. When there is inflation, real value is destroyed in money and all monetary items.PennySeven (talk) 22:14, 20 October 2009 (UTC) No, erode and destroy have slightly different meanings, in my view. Erode damages, and this can lead to something being destroyed, but doesn't necessarily do so. Thus inflation may damage or alter the real value of money, but money still retains value. It has the potential to destroy the real value, but it doesn't necessarily happen - otherwise the situation in Zimbabwe would be the norm. - Bilby (talk) 01:34, 21 October 2009 (UTC) You are in fact mistaken in the above. With inflation erode is always the same as destroy during indefinite inflation. 2% erosion in the real value of any currency is always the same as 2% destruction of the real value of that currency during indefinite inflation. It is impossible to recover the erosion of the real value of a currency during indefinite inflation. Yes, inflation alters and damages the real value of money, but, for good during indefinite inflation. Yes, money still retains value, but, for always and ever a lower real value during indefinite inflation that can never be recovered during indefinite inflation. So it is forever, permanent and for an indefinite period of time during indefinite inflation. Destroy does not mean destroy 100% in the next instant in time. 3% annual inflation only destroy 3% of the real value of money during a year. When that carries on for long enough, it is mathematically logical that the money´s real value will eventually be 100% destroyed during indefinite inflation. In fact, all the legal tender bank notes and coins in the world today will one day be 100% worthless during indefinite inflation. That is obvious to anyone who understands cumulative inflation. Thank you for your comment. I am 100% sure that you do not regard my disagreement with you as edit warring. I also do not see your disagreement with me as edit warring. This is simply a discussion during which all of us learn something new. This is the purpose of this talk page. I also think it is one of the ideas behind Wikipedia - to enhance human knowledge about what is already generally accepted. I accept that Wikipedia is not about what is true and factual but what is generally accepted even if it is not true and even if it is false - as long as it is generally accepted. I am 100% convinced that you will agree with me - after you think about it for a while - that what I stated in this response to your statement is actually generally accepted. This is what Wikiepedia is about. PennySeven (talk) 15:56, 21 October 2009 (UTC) Oppose -- inflation can erode currency without destroying it outright. --SarekOfVulcan (talk) 16:15, 21 October 2009 (UTC) Oppose Inflation does not necessarily destroy anything. Hipocrite (talk) 16:54, 21 October 2009 (UTC) SarekOfVulcan, erode is simply destroying slowly. When inflation erodes 10% of the real value of your money, then 10% of the real value of your money has been destroyed. You will never get it back during indefinite inflation. When inflation has eroded 100% of the real value of your money, then 100% of the real value of your money has been destroyed during indefinite inflaiton. PennySeven (talk) 15:14, 22 October 2009 (UTC) Hipocrite, go and tell the people in Zimbabwe that inflation does not necessarily destroy anything - and that they can now again use their ZimDollar 100 Trillion notes. You will make Mugabe look good. PennySeven (talk) 15:14, 22 October 2009 (UTC) No, I don't argue with polemics. This discussion is over. Hipocrite (talk) 15:46, 22 October 2009 (UTC) SarekOfVulcan, so what you stated is not correct. It is impossible for inflation to erode the real value of money and not destroy it. Erode and destroy is the same thing with reference to inflation. PennySeven (talk) 15:25, 22 October 2009 (UTC) See Deflation. --SarekOfVulcan (talk) 15:29, 22 October 2009 (UTC) In relation both to these comments and the above, generally the distinction between "destroys" and "erodes" is that one - destruction - is complete, while the other is partial. Under those terms, it still looks like inflation erodes the value of money, and that it can lead to the destruction of that value. The distinction seems important. I'd add that 12 months ago you argued that "erodes" was the correct term and that "reduces" in the article had to be replaced with "erodes". At the time you provided multiple sources to back that up. I'm not sure what has changed so that you now wish to use "destroys" instead. - Bilby (talk) 15:37, 22 October 2009 (UTC)

I would kindly request Hipocrite not to archieve this discussion in the middle of the discussionPennySeven (talk) 15:56, 22 October 2009 (UTC)

This discussion is over. You have taken to responding to people by accusing them of being insensitive to suffering in Africa - in otherwords, you no longer have any argument. It's time for you to walk away from this one. You will not get consensus to replace the word "erode" with "destroy" in this article, because it's just not true. Move along. Hipocrite (talk) 15:57, 22 October 2009 (UTC)

Re-closing discussion. If you can get one person at WikiProject Economics to agree with you, I'll re-open it myself. --SarekOfVulcan (talk) 15:59, 22 October 2009 (UTC)

I do not think just anyone can close a discussion. This discussion is still ongoing. PennySeven (talk) 16:21, 22 October 2009 (UTC)

removed dup post from under the hat--SarekOfVulcan (talk) 16:30, 22 October 2009 (UTC)

The discussion above is closed. Please do not modify it. Subsequent comments should be made on the appropriate discussion page. No further edits should be made to this discussion.

Clarification of fixed payment streams as requested by Hipocrite

Accountants choose to implement the stable measuring unit assumption during low inflation when they value constant real value non-monetary items (pensions, salaries, wages, rentals, issued share capital, retained earnings, capital reserves, other items in shareholders´ equity, trade debtors, trade creditors, taxes payable, taxes receivable, etc) in fixed nominal monetary units. Accountants´ choice of implementing the stable measuring unit assumption instead of measuring constant real value non-monetary items´ real values in units of constant purchasing power results in the real values of these fixed constant real value non-monetary items being destroyed at a rate equal to the rate of inflation when they are never maintained during low inflation because inflation destroys the real value of money which is the monetary measuring unit of account. Constant items are treated like monetary items when their real values are never maintained as a result of the implementation of the stable measuring unit assumption as part of the traditional Historical cost accounting model.

“The Measuring Unit principle: The unit of measure in accounting shall be the base money unit of the most relevant currency. This principle also assumes the unit of measure is stable; that is, changes in its general purchasing power are not considered sufficiently important to require adjustments to the basic financial statements.”

Pensions, like salaries, wages, rentals, etc. are not variable real value non-monetary items like cars and mobile phone. They are constant real value non-monetary items. Everyone receiving a salary or wage or receives rent understands that. The items are constant items, but they are paid in money. Inflation destroys the real value of money. Money is also the monetary unit of account. Constant items never updated (paid in fixed historical cost nominal amounts) are treated like monetary items by Historical Cost accountant. Consequently, their real values are destroyed at a rate equal to the inflation rate because inflation destroys the real value of money, which is the monetary unit of account.PennySeven (talk) 19:18, 23 October 2009 (UTC)

Do you have a specific change to the article that you would like to propose? Please do so here. Hipocrite (talk) 19:20, 23 October 2009 (UTC)

Yes. (1) I would like to change:

"The effect of inflation is not distributed evenly, and as a consequence there are hidden costs to some and benefits to others from this decrease in purchasing power."

To

The effect of inflation is distributed evenly in money and othe monetary items, and as a conseqence there are hidde costs to some and benefits to others from this decrease in purchasing power in monetary items that are assets to some and at the same time liabilities to others.

That is the first change. PennySeven (talk) 19:29, 23 October 2009 (UTC)

We agree that the effect of inflation is not distributed equaly amongst all economic actors, right? Hipocrite (talk) 19:30, 23 October 2009 (UTC)

Inflation is always and everywhere a monetary phenomenon. Milton Friedman. Inflation can only erode the real value of money and other monetary items. It does this evenly in all monetary items: money and other monetary items like loans and bonds. Inflation has no effect on the real value of non-monetary items which are sub-divided in variable real value non-monetary items (eg. property, plant, equipment) and constant real value non-monetary items (eg. salaries, wages, rentals, pensions, issued share capital, retained profits, all items in shareholders equity, trade debtors, trade creditors, etc.)

So, inflation effects all monetary items evenly. But, some of these monetary items are assets (loans given) to some and liabilities (loans received) to other all at the same time. The person with the asset (loan given) loses real value because of even inflation in loans given and loans received. He loses real value although he receives exactly the same amount back when the loan is repaid. He receives less real value back. He loses out. The person with the loan received has to pay back less real value because of inflation. He gains. But, inflation is evenly spread in the loan given and received. But, for the one it is an asset (he receives back less) and for the other it is a liability (he pays back less - he gains).PennySeven (talk) 19:43, 23 October 2009 (UTC)

(undent)Friedman does not represent mainstream opinion on inflation. Additionally, inflation does not effect all monetary items evenly. For instance, a 30 year interest only bond is far more impacted by inflation that a 5 year evenly amortizing loan. Hipocrite (talk) 19:45, 23 October 2009 (UTC)

Fine forget about Friedman. But, inflation does effect all monetary items evenly. That is logic. All monetary items are the same, namely money. Inflation obviously effects only the capital amount of the loan, bond, bund, TB or whatever: always only the capital amount. The actual nominal amount of the loan. Not the interest value or the price of the bond, TB, bund or other loan. The price is for the capital plus the predetermined interest that is playing out against inflation during the period of the bond, bund, TB, etc. This is only about the capital amount. Not the interest or price.PennySeven (talk) 19:51, 23 October 2009 (UTC)

Inflation affect money evenly. Monetary items that are not actuall money are exactly the same as money with the single exception that they are not actual bank notes and coins but accounted monetary values.PennySeven (talk) 19:55, 23 October 2009 (UTC)

(undent)I'm gonna have to ask you to do the bond math. I have three financial assets. I have $100 cash, I have a $100 5% baloon payment bond that matures in 30 years, which traded at 100% of face before the inflation change, and I have an even-payment $100 5% mortgage maturing in 5 years, which traded at 100% of face before the inflation change. Inflation used to be 0% per year. It's now 1%. Ceteris paribus, what is the present value of the three instruments, in current dollars? (Hint - $100, much less than $100, slightly less than $100). Inflation did not effect the three financial instruments the same. Hipocrite (talk) 19:57, 23 October 2009 (UTC)

The financial instrument as a whole is not a monetary item. The $100 capital is. Inflation only affects the real value of the monetary capital. Nothing else. The real value of the capital decreased to $99 after one year for both the 5 year and 30 year bond. The interest is not a monetary item. Interest is a constant real value non-monetary item. Both interest received and interest paid. Under Historical Cost Accounting it is one of those constant items treated as a monetary item by accountants because it is not measured in units of constant purchasing power as the International Accounting Standards Board authorized accountants to do 20 years ago in the Framework, Par. 104 (a) which states that financial capital maintenance can be measured in either nominal monetary units or in units of constant purchasing power but in nomimal monetary units like fixed pension payments. PennySeven (talk) 20:09, 23 October 2009 (UTC)

The financial instrument, since it is traded in a market is not a monetary item but a variable real value non-monetary item. It´s price is determined in the market. Monetary items´ real value is determined only by inflation and nothing else. If it is not like that, then it is not a monetary item. PennySeven (talk) 20:13, 23 October 2009 (UTC)

Securitized sub-prime loans are not monetary items. PennySeven (talk) 20:15, 23 October 2009 (UTC)

Inflation can only affect the real value of the $100 capital. The price of the financial instrument is determined by the outcome between the predetermined interest of the instrument and actual or expected inflation over the time period involved. The loss caused by inflation in the real value of the capital amount obviously is also a factor in the price of the instrument which is a variable real value non-monetary item traded in a market. PennySeven (talk) 20:21, 23 October 2009 (UTC)

This is an economics article, not an accounting article. Please try to figure out exactly what you are talking about and summarize in one post, using the language of economics, not accounting. Thanks. Hipocrite (talk) 20:23, 23 October 2009 (UTC)

You brought up the matter of interest which is not a monetary item. PennySeven (talk) 20:25, 23 October 2009 (UTC)

In economics, it is. Hipocrite (talk) 20:26, 23 October 2009 (UTC)

Interest is never a monetary item. It is a constant real value non-monetary item paid like all other non-monetary items in money. That does not make it a monetary item. It can be paid in beer, Big Mac or strawberries too which will not make interes into beer, Big Macs or strawberries.PennySeven (talk) 20:30, 23 October 2009 (UTC)

Mobile phones are paid in money too. Mobile phones are not monetary items.PennySeven (talk) 20:31, 23 October 2009 (UTC)

Salaries, wages, rentals, interest etc are paid in money. That does not make them monetary items. They are all constant real value non-monetary items - paid in money. PennySeven (talk) 20:33, 23 October 2009 (UTC)

We don't appear to be communicating. I'm not exceptionally interested in trying, as this is getting old. It's reasonably clear you're trying to apply accounting to economics. You need to stop that. Hipocrite (talk) 20:35, 23 October 2009 (UTC)

Thank you for your input. You are very kind. PennySeven (talk) 20:41, 23 October 2009 (UTC)

For what it's worth I don't agree with the first change, either, for approximately the same reasons Hipocrite stated. Inflation does effect money (well, at least that measured in the same currency) the same way, but no one really cares. It treats things generally considered to be money differently. — Arthur Rubin (talk) 20:44, 23 October 2009 (UTC)

I know you will agree that it is not about whether anyone cares or not. Thank you for agreeing that there are money and things "generally considered to be money".

I will concede gracefully to the obvious fact that you will prevent me from making any changes to the article. I have already made 371 edits to this article. So, a lot of what is in the article, is of my doing. I can take all that out, if you want me to. I can also list some very important parts that are there because of my doing. I am 100% sure that you will remove them once you know I was the one who contributed them.

Do you want me to list them for you?PennySeven (talk) 20:56, 23 October 2009 (UTC)

You have already removed some of them tonight without discussing them at all. What you have removed have been there for a long time. I am 100% sure you will remove all the others too, once I indicate to you which items they are. PennySeven (talk) 20:59, 23 October 2009 (UTC)

Here is the first one you can remove: I put this here:

"inflation is also an erosion in the purchasing power of money – a loss of real value in the internal medium of exchange and unit of account in the economy". Please remove it now.

Here is another one:

"Negative effects of inflation include loss in stability in the real value of money and other monetary items over time"

Here is another one:

"Increases in the price level (inflation) erodes the real value of money (the functional currency) and other items"

Here is another one:

"inflation has no effect on the real value of non-monetary items,"

Now that you know they are there because so me, I am sure you will realize that they should not be there - like the ones you removed tonight without discussing them. PennySeven (talk) 21:06, 23 October 2009 (UTC)

Good night and thank you for your input. You are very kind.PennySeven (talk) 21:10, 23 October 2009 (UTC)

I will take this article from my watchlist and leave it all to you. Thank you. It is obvious that you do not want me here. Thank you.PennySeven (talk) 21:12, 23 October 2009 (UTC)

What was the net result of tonights discussion: you have removed more of the article without discussing it. You can freely remove without discussing. The more we discuss the more you remove. So, it is obviously better to stop discussion. That is simple logic that everyone will agree with. PennySeven (talk) 21:19, 23 October 2009 (UTC)

You and Hipocrite revert. That is good behaviour.

I revert. That is vandalism!

You think I am going to stick around for you to abuse me more?

You are mistaken.

PennySeven (talk) 23:46, 23 October 2009 (UTC)

I read the above as an assurance that you will not be pushing the same changes to the Inflation page. If so, thank you. Keep in mind that many people over the last year have objected to your additions. Consensus is clearly against them. Unless there is good reason to think that consensus has changed, do not reintroduce your edits. Silence for a couple of weeks is not evidence that consensus has changed. Keep in mind WP:COI, you have a real world reason for wanting those edits introduced (being the author of a book on constant real value accounting, and also offering services on this), so it's better that you yourself do not introduce them. LK (talk) 04:45, 24 October 2009 (UTC)

::I keep in mind that many people over the last year have objected to my additions. Consensus is clearly against them.

::These are some of my additions over the last year:

(1) "inflation is also an erosion in the purchasing power of money – a loss of real value in the internal medium of exchange and unit of account in the economy".

(2) "Negative effects of inflation include loss in stability in the real value of money and other monetary items over time"

(3) "Increases in the price level (inflation) erodes the real value of money (the functional currency) and other items with an underlying monetary nature (e.g. loans and bonds)."

(4) "inflation has no effect on the real value of non-monetary items,"

I propose that they should be deleted since many people over the last year have objected to these additions. Consensus is clearly against them.

PennySeven (talk) 16:39, 24 October 2009 (UTC)

==Permission asked to delete 4 statements from the article==

I ask permission to delete the above 4 statements from the article since many people over the last year have objected to these additions. Consensus is clearly against them.

PennySeven (talk) 17:03, 24 October 2009 (UTC)

The 4 statements I request permission to delete are the following:

(1) "inflation is also an erosion in the purchasing power of money – a loss of real value in the internal medium of exchange and unit of account in the economy".

(2) "Negative effects of inflation include loss in stability in the real value of money and other monetary items over time"

(3) "Increases in the price level (inflation) erodes the real value of money (the functional currency) and other items with an underlying monetary nature (e.g. loans and bonds)."

(4) "inflation has no effect on the real value of non-monetary items," PennySeven (talk) 17:14, 24 October 2009 (UTC)

If you want to make edits, then make edits. If people disagree with them, they'll be reverted. The problem comes if you continue making those edits despite a number of different editors changing them back. This article isn't the place for you to play out some sort of emotional, approval-seeking drama. Either make the edits or don't, but stop bombarding this talk page. kmccoy (talk) 17:23, 24 October 2009 (UTC)

Related inflation concepts

Hyperinflation

Built-in inflation

Inertial inflation

Liquidity trap

Disinflation

Related concepts:

Rational expectations

Adaptive expectations

PennySeven (talk) 11:06, 7 December 2009 (UTC)

Want to add to issues in measuring inflation

"Most inflation indices also use price changes across a geographic area (the United States in the case of the Consumer Price Index). This introduces distortion as well, and can lead to further legitimate disputes about what the true inflation rate is. An individual in one specific geographic area with a spending profile that is different than the basket of goods used by an index could have a personal inflation rate that differs from the index."

This paragraph would be added to the end of the section just after the discussion regarding median inflation. —Preceding unsigned comment added by Inflationhawk (talk • contribs) 15:20, 20 January 2010 (UTC)

I apologize for assuming it was knowingly in violation of Wikipedia guidelines. Most of the section you added it to requires a reliable source; I didn't notice that what was already there wasn't properly sourced, either. You can add it, if you add {{unsourced-section}} to the top of the section, and we can attempt to locate sources. The web site, however, is not allowable, even if it isn't yours. — Arthur Rubin (talk) 17:57, 20 January 2010 (UTC)

Inflation affects people's purchasing power over time. What's the purpose of determining the price of a country's money unless to measure the purchasing power of the users of it's money? The change in the purchasing power of currency is statistically proven to vary by geography and population size in the United States.

The relevant citation would be any report on CPI distributed by the Bureau of Labor Statistics. Take this one for example: http://www.bls.gov/cpi/cpid0912.pdf If you look on Table 10 (about a 1/3 or more into the lengthy report), you'll see inflation rates for the period between December 2008 and December 2009 varied widely, not only by region, but by population size. In fact inflation of non-metropolitan cities in the midwest (populations less than 50,000) experienced an inflation rate 90% higher than large metropolitan cities of greater than 1.5 million in the West (3.8% compared to 2.0%). Those is non-metropolitan cities of the South had an even higher inflation rate than their counterparts in the midwest. These fluctuations appear in every report across regions and population sizes. Inflationhawk (talk) 01:31, 21 January 2010 (UTC)

A single price increase of a single item, could in fact be caused by changes in supply and demand of the item itself, as opposed to the effects of inflation, but the post is not meant to refer to a single item and is referring to the overall inflation rate. I am going to make a change to it and remove the part about the spending profile. It is very valid that an individual spending profile that differs from the "basket of goods" will yield a different inflation rate, but it is a seperate point than one about geographies and may detract from that point if it remains. Feel free to suggest further improvement, I do believe we are basically on the same page. Inflationhawk (talk) 14:47, 21 January 2010 (UTC)

Tone it down, please, P7. Thanks. --SarekOfVulcan (talk) 21:07, 21 January 2010 (UTC)

*sigh* "Tone it down" means "don't say YOU WON'T GET AWAY WITH THIS!!!111!!", not "remove every comment you've made on the subject".--SarekOfVulcan (talk) 21:27, 21 January 2010 (UTC)

"Personal" inflation rates?

Inflation is about the purchasing power of money. People do not have different inflation rates. Areas have different inflation rates. Hipocrite (talk) 21:55, 21 January 2010 (UTC)

Hipocrite, the people living in the areas that are affected by the inflation rate experienced will tell you that it is very personal. Are you suggesting the cited source, the Bureau of Labor Statistics is incorrect with regard to the difference in inflation rates across different areas? Do you have data to back up your claim? If you believe that there is no personal nature to inflation, then why not delete just the one sentence instead of the entire paragraph?

The concept is very real. There is a personal inflation rate calculator published by the UK Office for National Statistics that allows for consumers in the UK to more closely approximate their personal inflation rate. It is located here: http://www.statistics.gov.uk/pic/

An article in the Economic & Labour Market Review from January 2007 explains the concept of a personal inflation rate: http://www.statistics.gov.uk/elmr/01_07/downloads/ELMR01_07Powell.pdf Perhaps you should read it. It does a very good job of explaining the concept. We can add the citation to the sentence containing the reference to the personal inflation rate. I don't want to act again today on the board for fear of being accused of being in an edit war. I'll also add the external link to the UK personal inflation rate calculator.

Inflationhawk (talk) 00:11, 22 January 2010 (UTC)

InflationHawk: you will be able to add your content to the inflation article when you drop the "personal inflation" bit. There is no such thing as personal inflation. No matter what whatever government department from where-ever states. It does not exist. Because some government department uses the term, does not mean it is correct.

Drop the term. What you are stating is that an individual´s spending pattern is different from that indicated by the CPI basket: thus, an individual´s experience of price increases are different as indicated by the CPI: guess what: we all know that. Is that what you want to say? We all know that already. That is common sense: everyone knows that. It is so generally accepted that no-one except you feels that it even needs to be mentioned. We do not mention that the sun shines. We all know that. What exactly do you want to add to the article that is noteworthy and is not yet in the article and that you can back up with a credible reference? Remember that a reference from a university text book published by a well known publisher is a very good reference. It is even better when the author is a Noble Prize winner in Economics like Paul Krugman, for example. Does he mention personal inflation in his books? Google that and see if you can find something. I honestly don´t think you will find anything. PennySeven (talk) 00:40, 22 January 2010 (UTC)

I'll leave it to others to determine the suitability for posting this information. I respectfully disagree with your assessment PennySeven as adding content around the personal nature of measuring inflation, be it because of location or a difference in the spending patterns from the measured index, seems to me to be about the "Issues in measuring" inflation. Inflationhawk (talk) 01:14, 22 January 2010 (UTC)

InflationHawk: Hipocrite is 100% correct in his assessment and in the way he stated it: "Inflation is about the purchasing power of money. People do not have different inflation rates. Areas have different inflation rates." Issues in measuring inflation are issues relating to measuring the purchasing power of money. The article starts off with this statement: "This article is about a general rise in the level of prices." I agree 100% with your view that the CPI may be a very inaccurate measure of any particular individuals price experience.

Using the general price level to measure the purchasing power of fiat money is one of the greatest human inventions of all time: I would put it third behind the invention of money and the invention of the double entry accounting model (I am not referring to disastrously destructive Historical Cost Acounting at all, but simply double entry accounting). We take the CPI for granted because it was developed about two or three generations before our time. Fiat money and the CPI are inextricably interwoven: thus, the correct understanding of inflation being about the purchasing power of money is an important matter. It is equally important to safeguard that proper understanding in this article too.

The fact that the same money even in the same country has different purchasing power is a matter different from first correctly determining the general purchasing power in the country or economy or economic region as a whole.

The different purchasing power of the same money "because of location or a difference in the spending patterns from the measured index" is a very important area of research in eventually determining a universal unit of real value. I do not even know if that would be possible, but, we have to do the research and analysis.

So, what you want to contribute is very relevant and important: we just have to make sure that it is placed in its proper context not to confuse a subject that can be very confusing already especially with the very bad habit of most people to use the term inflation to mean two totally different things: the destruction of the purchasing power of money, on the one hand and simply any particular price increase, on the other hand.PennySeven (talk) 10:10, 22 January 2010 (UTC)

Then why have a section called 'Issues in measuring' inflation if we aren't going to have content about issues in measuring inflation? Inflationhawk (talk) 14:54, 22 January 2010 (UTC)

I support your viewpoint: the problem is that term you used: "personal inflation rate". There is no such thing. The fact that it is used by some UK government department does not mean it is correct or generally accepted. Present your proposal about "Issues in measuring inflation" without using that term. I am sure it will be generally accepted. Even better if you can back it up with a credible reference. Even if you do not have a reference and you wish to add something new that is valid and generally accepted it will be accepted. Something generally accepted hardly needs a reference. Something exceptional but valid and noteworthy needs exceptional credible references.PennySeven (talk) 15:08, 22 January 2010 (UTC)

The chairman of the Mises Org, Llewellyn Rockwell, quoted Murray Rothbard as saying "Murray Rothbard used to say that the main thing he bought with his money was scholarly books, one of the fastest-rising goods, and so his personal inflation rate was far above the average." in a piece called "What Government Is Doing to Our Money" ... http://mises.org/story/2328 Inflationhawk (talk) 15:43, 22 January 2010 (UTC)

You can also read more here: http://www.marketwatch.com/story/calculate-your-own-personal-inflation-index-with-this-formula Inflationhawk (talk) 15:45, 22 January 2010 (UTC)

InflationHawk, the more we tell you this article is about inflation being about the purchasing power of money and that whatever website/s is/are not a credible reference/s, the more websites you quote: I give up. Don´t you understand what we are saying, or, don´t you want to understand? Some people have that way of doing things too. I hope you are not like that. I have done my bit. Now it is up to other editors here on Wikipedia. PennySeven (talk) 17:55, 22 January 2010 (UTC)

Please avoid using unreliable sources. Hipocrite (talk) 18:00, 22 January 2010 (UTC)

Unreliable? So the following are unreliable (presumably because they are on the web)? US Bureau of Labor Statistics, Economic & Labour Market Review, Mises Org, UK Office for National Statistics, Chuck Jaffe, Llewellyn Rockwell, and Murray Rothbard?

These sources are all used on Wikipedia, hence you are suggesting Wikipedia itself is unreliable. Inflationhawk (talk) 19:05, 22 January 2010 (UTC)

No, no, yes, no, sometimes, yes, yes, and finally, yes, wikipedia is not a reliable source. Hipocrite (talk) 19:16, 22 January 2010 (UTC)

Inflation Adjusting in Wikipedia Articles

Does anyone know if there is are any style guides for reporting dollar denominated data over long period of times on Wikipedia? There is a NPOV dispute going on right now with regard reporting on movie rankings over time and I am seeking guidance. http://en.wikipedia.org/wiki/Wikipedia:Neutral_point_of_view/Noticeboard#POV_in_the_ranking_of_box_office_records_across_decades_without_addressing_inflation Cshay (talk) 22:41, 4 February 2010 (UTC)

Inflation Caused By Circulation of Money reference

Hi. I am trying to find an old version of this wikipedia article where it was stated that inflation was caused by the circulation of money. I am trying to get the reference for this statement; I have checked the history without success. Who ever edited it out - BRAVO! BRAVO! Thanks in advance. Spinnaker gybe (talk) 01:07, 19 February 2010 (UTC)

Were you referring to this: On the Origin and Evolution of the Word Inflation. [52]

It is 21 lines above where you are now reading - right on this page.

BTW, inflation is caused, in general, by an excess of money circulation in relation to what is required by the level of real value in the economy because inflation is always and everywhere a monetary phenomenon as stated by the late American Noble Laureate Milton Friedman. At very low levels of inflation it becomes very complex since general price level changes caused by many mainly consumer price related factors play a very important but very difficult to define exactly role. PennySeven (talk) 12:18, 24 February 2010 (UTC)

Real value of non-monetary items

The following statement in this article about Cost-of-Living Allowances is completely false and untrue when the fixed payments refer to the non-monetary items salaries and wages dicussed in the article:

"The real purchasing-power of fixed payments is eroded by inflation unless they are inflation-adjusted to keep their real values constant."

The purchasing power of fixed payment non-monetary items, e.g. salaries and wages is eroded by the stable measuring unit assumption unless they are measured in units of constant purchasing power to keep their real values constant. When the non-monetary items salaries and wages are measured in units of constant purchasing power their real values remain constant or stable no matter what the rate of inflation or deflation. It is the implementation of the stable measuring unit assumption that erodes their real value and not inflation. No matter what the rate of inlation (2% or 2000%), as long as the stable measuring unit assumption is rejected and salaries and wages are measured in units of constant purchasing power, their real values would remain constant. It is not inflation eroding their real values. It is the stable measuring unit assumption. This can not be done with monetary items, e.g. money loans.

The purchasing power of fixed payment MONETARY ITEMS, e.g. money loan payments, is eroded by inflation and they can not be inflation-adjusted to keep their real values constant. You can increase the monetary payment amounts to keep the constant value of the payment the same, but, that is an increase in payment, that is not inflation adjusting the monetary item because money and other monetary items can not be inflation adjusted or updated or measured in units of constant purchasing power: only non-monetary items. Salaries and wages are not monetary items. They are non-monetary items as indicated in International Accounting Standard IAS 29 Financial Reporting in Hyperinflationary Economies which state that all items in the Income Statement are non-monetary items. Salaries and wages are Income Statement Items.

Inflation is always and everywhere a monetary phenomenon as per Milton Friedman, the American Noble Laureate. Inflation can only destroy or erode the real value of money and other monetary items - nothing else. Inflation has no effect on the real value of non-monetary items.

“Purchasing power of non monetary items does not change in spite of variation in national currency value.”

Prof Dr. Ümit GUCENME, Dr. Aylin Poroy ARSOY, Changes in financial reporting in Turkey, Historical Development of Inflation Accounting 1960 - 2005, Page 9. [53]

I intend to correct the article with the following two statments:

"The purchasing power of fixed payments of non-monetary items, e.g. salaries and wages, is eroded by the stable measuring unit assumption unless they are measured in units of constant purchasing power to keep their real values constant. (The purchasing power of fixed payment of monetary items, e.g. money loan payments, is eroded by inflation. Money can not be inflatioan-adjusted to keep its real value constant. Inflation erodes the real value of money and other monetary items.)"

If the real purchasing power of a fixed payment is eroded by inflation, then logically, it has to be a monetary item. Money and other monetary items cannot be inflation adjusted. Salaries and wages are not monetary items.

PennySeven (talk) 11:21, 7 March 2010 (UTC)

Your addition makes little sense. It's not written in standard english - it appears you are again pushing your POV about inflation being an accounting artifact, or something. Hipocrite (talk) 12:14, 7 March 2010 (UTC)

These are facts. A fact is not a point of view. The fact is confirmed by the two Turkish academics, a professor and a Phd who state clearly: Changes in the purchasing power of money - which is inflation - do not change the purchasing power of non-monetary items. That is not a point of view. Are you stating they are wrong?

Please explain the statement by the two Turkish academics.

I think it is best to take this to arbitration. PennySeven (talk) 12:23, 7 March 2010 (UTC)

Do whatever you want except reinsert your disputed content into the article over and over, like you have been. Hipocrite (talk) 12:25, 7 March 2010 (UTC)

You are telling an untruth. I have only inserted it once. Please point out the two cases where I have done this "over and over". That indicates two cases. Please indicate the two seperate times when I have inserted the statement after it has been remove. Please do that. If you can not, then please retract your statement of "over and over". Thank you. I request this of you.

“Purchasing power of non monetary items does not change in spite of variation in national currency value.”

Prof Dr. Ümit GUCENME, Dr. Aylin Poroy ARSOY, Changes in financial reporting in Turkey, Historical Development of Inflation Accounting 1960 - 2005, Page 9. [54]

It is very clear what Prof Gucenme and Dr Arsoy state.

PennySeven (talk) 13:09, 7 March 2010 (UTC)

Hipocrite, please stop your personal attack against me. When I have the time I will report your personal attack. PennySeven (talk) 14:03, 7 March 2010 (UTC)

Could you please identify the personal attack? Tan | 39 14:15, 7 March 2010 (UTC)

Pennyseven has a history of going postal on people about this issue. I'm starting to think it would be a good idea to get an Arbcom ruling restricting him from editing this page. LK (talk) 14:33, 7 March 2010 (UTC)

Please indicate to me where I have inserted exactly the same content "over and over". This is the type of question that you cannot answer that you want me banned for. Please indicate where I have, in this instance, inserted exactly the same content over and over. I know you won´t be able to. You will simply ban me on the spot to solve your problem. I am waiting for the over and over. Please show me where.

PennySeven (talk) 14:37, 7 March 2010 (UTC)

Tan and LK: Please show me where I have inserted exactly the same content over and over after it has been removed over and over. I am waiting.PennySeven (talk) 14:39, 7 March 2010 (UTC)

LK I am herewith waring you about personal attacks too. PennySeven (talk) 14:40, 7 March 2010 (UTC)

In order to warn about making a personal attack, one must understand what a personal attack is. You clearly do not. It's clear English isn't your first language; this probably has something to do with it. Tan | 39 14:42, 7 March 2010 (UTC)

Tan, thank you for insulting my use of the English language. PennySeven (talk) 14:48, 7 March 2010 (UTC)

LK and Tan, please do not run away now: I am waiting for you two to indicate to me where I have reinsterted exactly the same content "over and over". I am patiently waiting. PennySeven (talk) 14:53, 7 March 2010 (UTC)

Anymore insults, Tan, about my use of the English language? It seems to come naturally to you. PennySeven (talk) 14:56, 7 March 2010 (UTC)

Come, come, Tan: we are waiting for more of your insults about my use of the English language: insult away, Tan. Why have you gone all quiet now? Are you editing some well-formulated insult about my English? PennySeven (talk) 15:00, 7 March 2010 (UTC)

To everyone else here - is this editor always this petulant? We should do something about it. Tan | 39 15:01, 7 March 2010 (UTC)

Tan, that is not an insult: that is a threat. See, now I am teaching you English.

I was right then: you cannot show me what I ask. All you are interested in is banning me. Strange how can read you like the palm of my hand, isn´t it? PennySeven (talk) 15:04, 7 March 2010 (UTC)

It's amusing that you are clearly an intelligent person with financial issues, but have no clue when it comes to understanding people. You're right; I think you should be banned. People don't want to collaboratively work with someone like you. However, this isn't my fight. To anyone else, I'd support an ArbCom case or RfC or whatever the next step here is. This editor is quite obviously lacking reason and social skills. Tan | 39 15:08, 7 March 2010 (UTC)

Tan, thank you for the insult. PennySeven (talk) 15:13, 7 March 2010 (UTC)

Yes, Tan, I can see insulting people is really your strong point.PennySeven (talk) 15:18, 7 March 2010 (UTC)

Yes, Tan, you are right: you do not lack insulting skills. PennySeven (talk) 15:19, 7 March 2010 (UTC)

Tan, and don´t forget: you still have to show me the "over and over" bit. PennySeven (talk) 15:21, 7 March 2010 (UTC)

The third party proof of what I stated is correct:

“Purchasing power of non monetary items does not change in spite of variation in national currency value.”

Prof Dr. Ümit GUCENME, Dr. Aylin Poroy ARSOY, Changes in financial reporting in Turkey, Historical Development of Inflation Accounting 1960 - 2005, Page 9. [55]

No-one understands it.

So: insults, personal attacks, false statements ("over and over") just, not to improve Wikipedia.

Make´s you think, doesn´t it?

PennySeven (talk) 15:26, 7 March 2010 (UTC)

Master of Puppets said it was going to be like this. She was right. PennySeven (talk) 15:28, 7 March 2010 (UTC)

I apologize beforehand to editor Tan for my bad English. I promise I will do my best to right niece eeeenglish fer jou, Tan.

What a joke this article has become: full of false statements that editors like Hipocrite and Lawrencekhoo refuse to allow me to correct even when I quote two economics professors with a direct online link to their acclaimed paper. The above example of the quote from the Turkish academics is a good example: they clearly state that inflation does not erode the real value or puchasing power of non-monetary items.

But, the article states: "the real purchasing-power of fixed payments is eroded by inflation" in the Cost-of-Living Allowance section, which refers to salaries and wages which are non-monetary items.

When I changed it, Hipocrite reverted it simply because he does not understand the statement from the Turkish professors (or so it appears: he simply wants to discredit me at all costs - which the above proves without a shadow of doubt.) This is Wikipedia.

This cannot be changed because Hipocrite and Lawrencenkhoo do not understand that the statement (or so they want us to believe):

"Purchasing power of non monetary items does not change in spite of variation in national currency value" stated by two Turkish univeristy professors means:

Inflation does not erode the real value or puchasing power of non-monetary items.

All Hipocrite and Lawrencenkhoo are interested in is discrediting me in any way possible. They are not in the least interested in the science. They are only interested in discrediting me. All they can think of is that I need to be banned. So too Tan.

Ohki-dhoki, Tan, ther iss thee niece eeenglishf fer jou. Ai houpe jou andersttend bicouse Hipocrite and Lawrencekhoo dhos nhot anderstend eniting. PennySeven (talk) 16:33, 7 March 2010 (UTC)

What a joke it is. More than 5000 people visit this article every day to read false statements like: "the real purchasing-power of fixed payments is eroded by inflation" when it refers to the non-monetary items salaries and wages.

Soerie, Tan, fer de bhad eeeeeeenglisssh.

PennySeven (talk) 17:02, 7 March 2010 (UTC)

These temperamental meltdowns have caused continuous disruptions to this article. Professor marginalia (talk) 18:23, 7 March 2010 (UTC)

The article has finally been improved in terms of this discussion. See the cost-of-living section. I apologize for the disruptions. I am not used to be insulted. PennySeven (talk) 18:27, 7 March 2010 (UTC)

Haven't you applied a definition limited only to circumstances of financial accounting in hyperinflationary economies where non-monetary exchanges take the place of monetary exchanges for business and trade? Professor marginalia (talk)

I do not believe that "non-monetary exchanges take the place of monetary exchanges for business and trade" in hyperinflationary economies. Do you have an example? Do you mean barter? That is not hyperinflation. That is just barter. The definition by Prof Gucenme and Dr Arsoy is obviously valid under low inflation and hyperinflation. The question is: does inflation erode the real value of money? The answer is yes, under all circumstances. The second question is: does inflation erode the real value of non-monetary items? The answer is: No, under all circumstances. It is impossible for inflation to erode the real value of any non-monetary item. Inflation can only erode the real value of money and other monetary items - nothing else. Inflation cannot erode the real value of the computer you are using. As inflation increases, the nominal value of your computer will increase - all else being equal - to compensate for the destruction in the real value of the monetary unit of account. This is true for all non-monetary items, including salaries and wages. PennySeven (talk) 18:53, 7 March 2010 (UTC)

When salaries and wages are measured in units of constant purchasing power their real values are maintained constant at any level of inflation, hyperinflation and deflation. When salaries and wages are fixed their real values are being destroyed by not measuring them in units of constant purchasing power; i.e. by measuring them in nominal monetary units when accountants implement the stable measuring unit assumption. So, it is the implementation of the stable measuring unit assumption that is destroying the real values of salaries and wages - not inflation. PennySeven (talk) 19:04, 7 March 2010 (UTC)

International Accounting Standard IAS 29 Financial Reporting in Hyperinflationary Economies- salaries and wages are not "non-monetary items" because they appear on an income statement. They are "non-monetary items" when they are paid in something other than straight money currency--. Professor marginalia (talk) 19:07, 7 March 2010 (UTC)

Yes, I agree with you about the Income Statement item. That is not the best definition of non-monetary items. IAS 29 defines non-monetary items as all items that are not monetary items. Everything that is not money, is a non-monetary item. Salaries and wages are only paid in money as a means of payment. They can be paid in kind too. Salaries and wages have constant real values over time. They are constant real value non-monetary items like all items in shareholders equity, trade debtors, trade creditors, all accounts payable, all accounts receivable, etc. PennySeven (talk) 19:17, 7 March 2010 (UTC)

Non-monetary does not mean paid in other than straight money currency. It means when it is not money or a monetary item. A monetary item is an item with an underlying monetary nature. PennySeven (talk) 19:20, 7 March 2010 (UTC)

IAS 29 clearly states that all items in Shareholders Equity are non-monetary items. They are constant real value non-monetary items. Money is only the agreed and generally accepted medium of exchange. PennySeven (talk) 19:22, 7 March 2010 (UTC)

Any item that can be measured in units of constant purchasing power during low inflation is a constant real value non-monetary item. Variable real value non-monetary items are items with variable real values over time, e.g. property, plant, equipment, inventory, foreign exchange, etc. IAS 29 requires or orders or forces companies to measure all non-monetary items, variable and constant real value non-monetary items, in units of constant purchasing power during hyperinflation because the IASB considers hyperinflation to be an exceptional circumstance. PennySeven (talk) 19:28, 7 March 2010 (UTC)

I know that PricewaterhouseCoopers, the IASB, the FASB and most accountants define trade debtors and trade debtors as monetary items. However, they are not. Everyone in a hyperinflationary economy knows that they are not monetary items. When you buy a computer from me you owe me for the computer if you do not pay me cash. The computer is a non-monetary item. When you do not pay me cash, we did not agree that I am now suddenly lending you money and you have to pay me back the money. You bought a non-monetary item from me and you have to pay me the full price for that non-monetary item which is not a money loan. If inflation increases 10% during the period that you do not pay me you have to pay me $550 at the end of the period when you pay me. Trade debtors are not monetary items. Everyone in a hyperinflationary economy knows that. No-one at PwC, the IASB and FASB and other Big Four accounting firms knows that. PennySeven (talk) 19:39, 7 March 2010 (UTC)

I was confusing; I meant payment with a currency value, not the currency itself. Let's keep it simple here. I don't understand the point in this dispute. If inflation is always a monetary phenomenon, the Friedman def that you subscribe to, then why emphasize non-monetary alternative definitions to describe the loss of purchasing power with inflation? Doesn't it lead to an incoherent argument? It sounds like "non-monetary units are the only way to measure inflation (which is always a monetary phenomenon)". And if that makes sense somehow, then there is no inflation in hyperinflation, supported by the fact that non-monetary accounting guidelines are used. ?? This doesn't make sense to me. Professor marginalia (talk) 19:41, 7 March 2010 (UTC)

All non-monetary items are normally paid in straight money currency. Money is simply the medium of exchange. They can be paid in Big Macs, beers, strawberries, whatever the supplier would accept in payment. PennySeven (talk) 19:44, 7 March 2010 (UTC)~

What you've described above sounds like a mechanism for indexing for the inflation. Yes, of course, if debt obligation (salaries, loans, receivables) are not constant and static, afixed to a set currency value, but instead adjust with in line with the inflation, then that is another means to preserve purchasing power during inflation. This doesn't conflict with the original claim in the article. Professor marginalia (talk) 19:51, 7 March 2010 (UTC)

The dispute in this article is about the original statement: "The real purchasing-power of fixed payments is eroded by inflation unless they are inflation-adjusted to keep their real values constant." This is from the Cost-of-Living section. The fixed payments thus refer to salaries and wages being kept fixed. The dispute is: What erodes the real value of salaries and wages when they are kept fixed? Inflation or the stable measuring unit assumption? Salaries and wages are constant real value non-monetary items. They are not monetary items. Inflation can only destroy the real value of money and other monetary items. The two Turkish economists confirm that inflation does not erode the purchasing power or real value of non-monetary items. So, it is not inflation eroding the real value of fixes salaries and wages which are non-monetary items - as the original statement stated. It is the implementation of the stable measuring unit assumption. When it is not implemented, i.e. when salaries are measured in units of constant purchasing power or inflation adjusted or updated then their real values are maintained as it is done in most economies in the world. All accountants do that while they implement the overall Historical Cost Accounting model. Accountants only measure salaries, wages, rentals, etc in units of constant purchasing purchasing power. PennySeven (talk) 20:13, 7 March 2010 (UTC)

The statement by the Turkish economists, namely, that inflation does not erode the real value on non-monetary items conflicts with the original statement in the article that states that "The real purchasing-power of fixed payments is eroded by inflation" when the fixed payments refered to are salaries and wages which are non-monetary items. It is not inflation doing the eroding, its is the stable measuring unit assumption when they are kept fixed. The statement is about fixed payments. The original claim in the article, namely: "The real purchasing-power of fixed payments is eroded by inflation" is thus wrong.PennySeven (talk) 20:22, 7 March 2010 (UTC)

This article is about inflation. PennySeven (talk) 20:31, 7 March 2010 (UTC)

It's not that complicated: you know that fixed payments lose real purchasing power during inflation unless those payments aren't monetary or unless they aren't fixed. It's one or the other. Does during work better for you than by? Professor marginalia (talk) 21:03, 7 March 2010 (UTC)