In the last post I talked about inflation and how it represents a generalized rise in prices and a permanent decrease in purchasing power. I know I mostly focused back then on inflation caused by the growth of the money supply, but inflation actually has a lot of possible mechanisms. In this post I’m trying to go through all of them and explain them. As a basic rule, inflation caused by printing money is not the main cause of inflation. Naturally, inflation appears when there

In one of the past posts I said we’d address the problem of inflation. Somehow, every time we looked for solutions to different problems, we kept running into the problem of money. We said we can’t grow incomes fast enough, because productivity can’t be grown fast enough either. So how do we address the money problem? Well, another way to visualize the situation is to imagine a big bucket of water, and inflation is a small hole in that bucket. Normally the hole is just big en

What do you say we do an exercise in imagination today? What if we reinvented society and human civilization? Obviously, this can only be a theoretical exercise, because in reality things are much more difficult to change, and neither you nor I have any real power to do something like this. In my imagination everything can be changed very easily.. I don’t necessarily think being a dreamer is a bad thing. I have been like this my entire life. When I was in kindergarten, I used