Originally posted by KazetNagorra
No. Inflation means that prices (as measured through some basket of goods and services) have risen.
According to monetarist theory, the supply of money is the main driving force behind inflation.
Gas prices can change up or down by 25% or more over a 6 month period.
The price of medical care may go up by 7% in a year while the price of housing falls during that same year.
The price of consumer electronic goods of similar abilities continues to fall year by year. The TV I bought 6 years ago for $800 would cost maybe $250 or $300 now. That seemingly has little to do with the US dollar gaining value and clearly the FED should not be taking any credit for this price reduction.
One can squabble about what is and is not an accepted definition of inflation, but to ignore the fact that there are many things affecting prices other than inflation is a curious behavior.
When you watch the price of one commodity go up while at the same time another commodity goes down, it is natural for a thinking person to wonder, "How much of the price change is due to the general loss of value of the currency and how much is due to other market forces?" And if there are other market forces in play, one may also wonder, "What would prices do if the value of currency stayed the same?" And one may even go so far as to wonder, "Are there non money supply related market forces that are lowering prices happening that are not being realized because money supply changes are offsetting the would-be gains?"
You can use the word "inflation" to mean whatever you want. But there is a component to price changes that is due to increase of money supply that is separate from other market forces. It would be good if we had a single word for that component. Some use the word "inflation", but I see that causes miscommunication on this forum. What word would you suggest we use to refer to the price change components that are driven by money supply changes?
If you're not slightly curious, so be it. The government is responsible for the erosion of purchasing power due to increased money supply. They're also the ones telling us what a great job they're doing when they report 2-3% inflation. Believe what you want.