As of this posting, I will have posted 19 articles on inflation to express my concerns regarding the conceptual flaws resulting from its definitional conflation with rising prices.
Again, I underscore that inflation is—and only is—the expansion and devaluation of the money supply within a currency.
Again, I underscore that rising prices is NOT inflation, but that rising prices is the effect of the cause we call inflation; however, inflation is merely one of several possible causes of rising prices.
Again, I underscore that inflation will necessarily cause the EVEN up-bidding (never down-bidding) of prices on all commodities and that this up-bidding will ensue over an average period of 18 months, but can occur sooner or later than the average and almost never immediately.
Again, I underscore that many other factors—other than inflation—can cause price increases AND decreases to a commodity or commodities and that these often occur relatively immediately and UNEVENLY.
Intra-Currency Transactions
These repeated points are detailed in my previous 18 articles and I strive not to detail them again herein—with one exception. I believe that although I have previously scoffed at the notion that the United States exports its inflation to other countries, disputing the notion deserves an illustrative mechanism to critique.
I exhibit one hypothetical mechanism for the misconception of inflation exportation, but lets first show that inflation CANNOT vary within a currency.
For this purpose, I repeat Kari Lake’s comment exposed in my October 12, 2022 article, wherein she reported that inflation in parts of Arizona (the Phoenix-Mesa-Scottsdale corridor) was the highest in the US. In my response to this at that time, I showed that although regional prices can behave differently within a currency, inflation does not.
Since none of the states within the United States can lawfully print money, they are unable to produce inflation. And by extension of the same principle, the city of Phoenix cannot print or counterfeit money nor can Scottsdale or Mesa to effect a higher inflation rate in one region, state, county, city, etc. over that of another. None of these cities—as are all communities within the confines of the US—can produce inflation. I’ve said this or alluded to this before, but what I haven’t posed is the following:
Is Kari Lake (wink) admitting that Arizona is forging US currency? Is Kari Lake (wink) also admitting that these three cities are forging more US currency than the other Arizona cities?
Kari, this is asinine!
And this is not to say that Kari Lake is more misinformed than any other politician or government official—regardless of political persuasion—in the world on this subject. From my observations, they all are equally ignorant.
But let’s get even more absurd with the analogy that she has inadvertently provided.
Almost daily, I twice pass two gasoline stations that are separated by a side street. One is an Amoco®, the other a 7-11®. Occasionally, and on the same day, the price for regular octane gasoline increases at one while it decreases at the other.
Seeing this, would Kari Lake then announce in a press conference that inflation was occurring on one side of the street while deflation (no such thing) was occurring on the other? This is ridiculous, but this is exactly the same mistake—on a different scale—that Kari Lake and many others ascribe to.
[Paradoxically, I expect that Kari Lake would blame our federal government for the inflation—a correct accusation.]
Inter-Currency Transactions
But now let’s consider the notion that inflation in the United States is being exported abroad. I use Turkey to exhibit a hypothetical explanation. I’m no expert at international commerce, but I can imagine the following:
Turkey’s so-called inflation was reported to be 83% a year ago. I don’t doubt that Turkey’s inflation was/ is extremely high, but as I have justified, inflation cannot really be measured and trying to do so with some kind of price indexing—as all countries use—is sloppy and misleading. [It reminds me of attempting to measure muscular strength and power on a Cybex dynamometer… impossible. We referred to such a device as a “rubber ruler.”]
[I assume Turkey’s inflation to be high with a singular observation: It has the largest standing army in the region and this is an expense that probably requires massive deficit spending.]
But lets go with the notion that Turkey imported its inflation from the United States. How might this occur? [This notion might greatly benefit Turkey’s leaders—to be able to blame the US for their financial woes.]
The expected educated answer is that Turkey purchases commodities using the US reserve dollar. And since the US dollar is suffering inflation, so supposedly must be any country that employs it.
Not so fast!
Turkey has its own currency. And that currency is not affected by the currency of the US.
Sure, for a commodity purchased internationally, Turkey might be required to employ the inflated US dollar. And to employ the inflated US dollar, Turkey must pay for those inflated US dollars with more of its currency. And this increased price will cause the price of this commodity to be greater for Turkish citizens. But this increased price is just increased price. It is NOT inflation or a devaluation of the Turkish currency. Only the Turkish government can inflate and thus devalue Turkey’s currency.
[If we accept the flawed notion of exporting the inflation of the US dollar to Turkey, why does no one mention (As I have not heard) fears of Turkey’s inflation leaking over to the US? Is there not an osmotic effect of the higher inflation of one country to another with lower? Of course, I’m being silly here, but I’m surprised others are not being serious with such a model… the relative sizes of the economies of the countries notwithstanding.]
Again, the ill-founded notion that inflation is exported is due to its definitional miscarriage by politicians, economists, and the media. Inflation is not contagious between currencies. Inflation cannot be exported (or imported); however, there is a kind of contagion resident in the communicability of the financial corruption endemic in all governments to use inflation for the purposes of theft against their peoples.
So: inflation is = printing more money (larger money supply)
Price increases are just that. The CONSUMER PRICE INDEX is just that, not an indicator of "inflation"
Inflation is: "There was 120 USD in the world last year, this year there is 200 USD because the Fed printing more because the US Gov needed a bailout?"