EDIT: I probably should have used "express" rather than "capture", apologies.
The question is, how good is the approximation and how meaningful is an average statistic?
The statistic is useful and meaningful, but doesn't say everything. Fortunately we have hundreds of inflation metrics, for different groups (urban, rural), age groups, countries, states, regions and sectors.
Virtually none of these are published in media outside the general CPI measure, but all can be found on government/centralbank/consultants etc websites, typically with methodological sections explaining how they came to their conclusions.
For example: https://www.bls.gov/cpi/home.htm
Here you can find various inflation figures, methodology and data.
Indeed (as you edited), the national inflation figure can 'capture' it in the statistic sense, but cannot capture it in the sense that the number expresses individual paint points that different subsections of the population experiences, like rent in a HCOL urban area, or the inability for wages to catch up with an ever increasing downpayment requirement.
Every European capital / big city has seen absolutely massive increases in rent and house prises since the ECB started printing money. (Housing sector if very 'close' to the banking sector and so more directly affected by the availability of cheap credit). Not causes by the ECB 100%, but accelerated by it nonetheless.
But if the cost of all other goods has stayed the same, plus the rent and house prises in rural areas has been normal or even dropped, inflation on average will be ok.
(And then the ECB says: inflation is less than 2% _on average_ so no problem here. print. print.. print...)
For Brussels at least, that is simply not true. See the graph in section 'Brussels Hoofdstedelijk Gewest' of [1] for the evolution of real estate prices in the Brussels region since 2008. There are also strict rent controls in Belgium: if you are renting your landlord can increase the rent with inflation, but not more. Every three years the landlord can theoretically increase the price, if he has made improvements to the property or he can prove that the rental value has objectively increased by more than 20% (which is hard, if there are disputes courts tend to side with tenants).
[1] https://statbel.fgov.be/nl/themas/bouwen-wonen/vastgoedprijz...
This assumes the numbers accurately represent reality. Here in Canada, the shelter component of our CPI numbers do not reflect at all the massive price inflation that has been occurring in both buying and renting shelter.
https://www150.statcan.gc.ca/t1/tbl1/en/tv.action?pid=181000...
If one was to take their numbers at face value, you would conclude that shelter price inflation is generally consistent with all other goods, and that it has been consistent across all regions, neither of which is true.
Printing money is what central banks do. It's what every Eurozone nation used to do with their own money as well before switching to the Euro. So unless you can explain what the ECB does differently that makes this worse than the central banks before it, you don't really have much of an argument.
Is it printing money faster than the central banks before it did? If so, give some numbers and sources please.
And in general, be explicit about your claims, because as written you're practically suggesting that the Eurozone is acting like the Weimar Republic.
Search "FED balance sheet vs S&P" or something similar. E.g. http://whattheythink.com/data/84893-feds-balance-sheet/
Inflation is a vague concept. When people try to measure inflation, they're using filters and aggregates. Criticism that those filters and aggregations are distorting the view (for political purposes) is valid and a frequent motivation to publish academic papers.
tl;dr Of course it can.
What we see in our everyday lives is sometimes called "price inflation", i.e. prices rising, and that can happen disproportionally.
As a US-centric example, computer prices have been gradually decreasing, while healthcare and housing costs have skyrocketed.
So an increase in the supply of money is separate from an increase in "a concentration" of money in a "market area" like healthcare, and productivity and material costs and whatever else factors into prices at any given time.
Of course, an increase in the supply of money factors into prices where ever the money goes.
This is not true unless you live in early 1900's or only surf some crackpot websites.
In the language of economics inflation without specifics means price inflation. If you mean monetary inflation, you must use two words.
Increasing money supply is not going to prices if
1) economy grows and demand for money matches the supply or
2) velocity of money decreases. https://fred.stlouisfed.org/series/M2V As a thought experiment: If you mint a trillion dollar coin but are not using it, monetary supply increases radically but it has no effect on price inflation because it has zero velocity.
"Inflation is always and everywhere a monetary phenomenon in the sense that it is and can be produced only by a more rapid increase in the quantity of money than in output. … A steady rate of monetary growth at a moderate level can provide a framework under which a country can have little inflation and much growth. It will not produce perfect stability; it will not produce heaven on earth; but it can make an important contribution to a stable economic society."
That's not so say that many don't hold the belief you have (i.e. that inflation should be understood primarily as price inflation, and monetary inflation is a secondary consideration). But it's not the only mainstream opinion.
Probably. It's strange how the only school of economic thought that actually corresponds to reality is the one shunned as "pseudoscience" or something.
Go see for yourselves: http://mises.org
>I think the Austrian business-cycle theory has done the world a great deal of harm. If you go back to the 1930s, which is a key point, here you had the Austrians sitting in London, Hayek and Lionel Robbins, and saying you just have to let the bottom drop out of the world. You’ve just got to let it cure itself. You can’t do anything about it. You will only make it worse. You have Rothbard saying it was a great mistake not to let the whole banking system collapse. I think by encouraging that kind of do-nothing policy both in Britain and in the United States, they did harm.
Can you come up with an argument against Austrian Economics in your own words, or are you content trying to discredit it with an appeal to Milton's authority?
I could argue against the quoted passage but I don't want to bother doing any more work than you have.
I'll throw you a bone: Deflationary policy is idiocy. Belief that monetary policy can be neither inflationary nor deflationary is anti-empirical and wishful thinking.
And yet, somehow I still think you're not even trolling!
But if not.. Once again, I have to wonder what the hell is wrong with you people.
By the way, that wasn't an appeal to authority. It was a link to a website where you can educate yourself, without having to take my word for anything.
As for monetary policy, it shouldn't even be a thing.
Don't worry, I've spent plenty of time educating myself. Grad school was pretty good for that. It even says Economics on my diploma, heyyy.
I'm not sure what you mean by "monetary policy shouldn't even be a thing." That's like saying, "guns shouldn't even be a thing."
For starters, if you understand that value is subjective, you'll also understand that there's no way to put a number on how much you want something, or precisely how much you'd be willing to pay for it, etc.
You'll also understand that you can't base calculations on something you can't actually quantify, and have no way of accurately measuring..
So yeah, you'll understand that most of what you've been taught is just garbage-in-garbage-out.
As for monetary policy, it's essentially just "a plan for forcefully intervening in an economy", and it doesn't actually happen for the greater good - it's done to benefit the government and their buddies.
As a prime example, who gets access to newly printed thin-air-money at zero interest? Do you want him to buy real assets with "free money", and have you suffer the consequences (of the resulting decrease in your currency's purchasing power)?
Counter-example: I do it all the time. Ever heard of "revealed preference"? Sure there are weird human things like preferring A to B, B to C, and C to A, but I'm OK with a map not being the territory.
> a plan for forcefully intervening in an economy
All government choices are forceful interventions, whether a choice to act or not act.
> Counter-example: I do it all the time.
No you don't. I mean, sure you can pull numbers out of your ass and pretend to calculate something based on them.
Or you can even explicitly set out to calculate garbage results with garbage inputs, if you insist.
But you're not putting accurate numbers on how much anyone wants anything, because it's all subjective.
> All government choices are forceful interventions, whether a choice to act or not act.
Indeed. That's how ruling over subjects works. I can't parse the latter part though, but whatever.
If that's pulling something out of my ass, well, I guess you're not a fan of statistics or the scientific method? Oh, actually, I forgot that's a central tenet of the Austrian School -- science is bogus when contradicted by philosophy.
> can't parse the latter part
If a government creates money, then it must have a monetary policy. Do you think government-backed money is not "for the greater good"?
Do you think 2% is a good rate for you to be losing your savings' purchasing power? How fast would you like gangrene to spread through your body?
> 2%
The correct rate varies according to the behavior of the economy.
> gangrene
What a strange and shifting conversation.
Friedman simple quantity-of-money rule policy didn't withstood the test of time.
His idea that flexible exchange rates make inflation purely domestic issue is the cornerstone of economics. No good economist today believes that unemployment and deflation should be preferred for currency devaluation thanks to Friedman.
Friedman spend his life trying to prove that there had never been in history a monetary supply growth without being followed by inflation. What he didn't try to prove was that monetary supply growth always is followed by inflation.
But I think 10 years ago there were definitely mainstream people who at least claimed to believe the "inflation is always a monetary phenomenon". Still, it sounds like you are more up to date on this than I am so I appreciate the clarification.
This is correct even today. Among politicians and pundits there is completely different economic discussion and it's really confusing.
You know, if you would give top 1000 dry academics in any field a way to flag news media or opinion pieces in their specialty with visible [extraordinary or surprising claim] -flag if they do it with 4/5 majority it would be really helpful public service (startup someone?)