Monday, May 28, 2012

Wesley changed my life

I worked with a guy named Wesley years ago. He worked behind the counter in a steel warehouse. He dealt with customers. He dealt with demand.

Back then, I still thought of inflation in the demand-pull terms expressed by Milton Friedman and Anna Schwartz. Too much demand, I said, is the cause of inflation. Too much money chasing too few goods. You know.

Wesley said, "But prices go up because costs go up."

Related posts:
The Cost-Push Economy ...20 Feb 2011
Indonesia Now ...11 Jan 2011
Ignorance is Bliss ...6 July 2010
The Long Decline ...17 June 2010
The Schwartz ...31 Oct 2009

1 comment:

Woj said...

Just read the first link on the Cost-Push Economy and I highly recommend it to others.

Reliance of money-like instruments (credit) has dramatically changed the balance of “What we spend” and thereby altered the source of inflation. This change may also help explain why, since the 1980’s, The Economy Needs a Bubble!