What a fascinatingly erudite comment from Stephen Toplis of BNZ. Petrol prices have dropped and there is a drop in the price index! Are petrol costs not part of the index? But, being an economist, he assumes the volume of money has dropped too. To then, inflation is always caused by too much money and presumable deflation by too little. They cant accept that a rise in petrol prices increases costs all round, even if some are a bit elastic and take a while. Inflation is measured in only one way, by rises in prices, therefore inflation IS rising prices, not always caused by too much money. Of course, they acknowledge cost-push inflation at times, but can never take it into consideration because it lies outside the mandatory volume theory for money and prices. It seems Mr. Toplis has never got beyond some of the rubbish taught in Stage 1 Economics in this country.
Posted on: Fri, 09 Jan 2015 23:54:36 +0000
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