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The poor only see their already low incomes declining because there's an implicit assumption that wages can't be increased to compensate.

The usual narrative is that if wages were increased, that would be 'inflationary.'

Meanwhile profits that increase at the expense of wages aren't considered inflationary, even though they drive down effective buying power for the majority of the population in an equivalent way.

Nor is commodity sharking - at least not directly.

Nor are asset bubbles.

So in practice, traditional inflation is almost entirely a political concept. It's a loaded idea that enforces certain political assumptions about the way that wealth should be distributed.

This doesn't mean that economies can't explode. But economies can explode in many ways, and it's interesting that only some of them are considered inflationary, while others are described as "Oopsie, didn't see that coming - just one of those things, I guess."

by ThatBritGuy (thatbritguy (at) googlemail.com) on Sat Nov 20th, 2010 at 12:28:52 AM EST
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