Inflation

Inflation seems to be all the rave in the discourse of economists. As discussed before, all concepts are theoretical. Inflation, in essence, is theoretical.

This being said, allow me to elaborate on the definition of such a term.

The mainstream (Keynesians, Monetarists, MMT, etc.) connote this term as a rise in the price level, typically calculated as a year over year percentage.

This is simply one metric that can be reviewed to find a correlation of some sort. Averages are the basic principle that statisticians use to describe trends.

Thus, the measure would be a rise in the average price level of a basket of goods, compared to the next year's average rise in the price level of the same basket. This is expressed in percentage terms, which can also be a fraction.

The basket, in their reified measure, is an average, randomly chosen from average usage of a sample size. Lots of averages!

Austrians define inflation as a rise in the money stock.

Now in order to understand what the money stock is, one must choose the best descriptor of estimates out there which can be converted to warehouse receipts over a short-term period. Indeed much of these descriptions are labeled through conflated ideas.

Loans = Deposits, this basic banking tautology can lead to a higher money stock, which in turn cause a precipitous rise in prices--the notion of consumer prices described above. This, for Austrians, not only assumes consumer prices, but overlooks capital goods prices. (More on this issue tomorrow)

Consequently, the mainstream descriptor of inflation is only a theoretical average of consumer prices affected by a rise in the money stock.