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February 26, 2013



All good points except that the most insidious form of price rise is a tax or duty increase. Beer, wine, spririts, fags and petrol spring to mind. Add VAT to these and what a pain they are.

'Pain' being my polite collective noun for a group of undesirbale taxes.

Conincidentally, these are the 'nudge' (or sledgehammer) taxes, designed to change our behaviour. They affect our lives every day and we resent them.

That's why inflation feels worse.


I don't know why economists regard technological progress as deflationary ?

Should all have stone age living standards ?

Unless you wish to pony up 110UKP for a kindle or other device (not to mention the use of a 3G network) you will not be able to buy/read Chestertons work (which is in the public domain). A public good.

I picked up Moby Dick for 1UKP new, retail (shop) in dead tree. (no extras required - pre kindle)

Music is free, tell that to the RIAA et al.

More DRM: http://www.theregister.co.uk/2013/02/26/next_generation_secure_memory/

You cannot live by technology and the erosion of distribution costs/monopolies alone. See Maslow.

Technological progress should not be used to reduce headline price inflation.

"This deflation was caused by technological progress that created significant economic growth"

Technology tends to increase in performance while been generally stable in price.

Meaningless metrics: GDP and Price Inflation.

Music was free before it could be recorded !

Before property rights stones (as in stone age) were free !

Even food was community property.


Very good post. A related observation is that the standard deviation of prices used in CPI is huge. This has two consequences. First, different people at different times will see radically different inflation levels. Second, quantity theory based on MV = PQ looks ludicrous.


Great post. Technology, globalisation, crop efficiencies and greater competition have all been incredibly deflationary over the past 50-100 years. Skilled manufacturing unit labour costs, for example, have fallen some 90% in the past 50 years.

Surely, however, given US CPI has averaged 4% since 1960, this raises the issue that fiat currencies are incredibly poor stores of value. To counteract such deflationary pressure, central banks have printed enormous quantities of money. And that was before QE (see chart 3 - monetary base vs. M2 http://inflationhub.com/charts/)

Is the age of fiat currencies coming to an end?


Thanks for the tip: I've just bought GKC's complete works. At £1.97, why wouldn't you?

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