[ExI] Inflation graph

[John Clark]

On Thu, Nov 28, 2013 at 12:33 PM, Rafal Smigrodzki <
rafal.smigrodzki at gmail.com> wrote:

> John, you should not throw out a theory based on a thousand data points
> when a single new data point seemingly disagrees with it.
>

You are incorrect. If that single data point is well established as being
real and it doesn't correspond with your theory then you must indeed throw
out the theory regardless of how much you love it.

> Inflation is a monetary phenomenon (that's a well-accepted economic
> theory), i.e. it is caused by an increase in the amount of circulating
> currency.
>

The amount of circulating currency has increased dramatically but the
inflation rate has not, therefore the theory that it is the only variable
responsible for inflation must be wrong. In retrospect it's not surprising
that the theory is wrong, if inflation were caused by just one thing then
economics would be simple, instead the economy is the product of 7 billion
minds and is astronomically complex.

People are always fighting the last war not the present one, today they
remember the 1970's when inflation was terrible and fear its return and
overcompensate.  In the 1970's they remembered the 1930's when deflation
was terrible and feared its return and overcompensated too far in the other
direction.

  John K Clark
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