Most folks will tell their false beliefs about inflation like this.

"Inflation is a net increase in money supply"

or

"Inflation is a net increase in money supply and credit. Deflation is the opposite."

or

"Inflation is a rise in all prices."

or

"Inflation is a rise in the General Price Level."

Never can men "inflate the money supply" and since there's no such thing as a monolithic "one-price" consumer price for all goods, it's impossible for consumer price inflation to be a true concept, a true belief about existence. In short, believing in a Keynsian Price Level is akin to believing in Tooth Faieries and Hobgobblins.

On Money
========

Folks never stop and then start to think about the phrase "money supply."

Buyers and sellers act and swap Commodities, one for the other.

Money is a commodity. It's the thing you trade for another thing, say oil for money or wheat for money.

Man must depend on the graces of nature to deliver wheat, even with his science of farming, while he can wily print as much money as he thinks he can scam others with until credit relationships break down.

Where you find offers of money (supply), you find calls for money (demand). What gets swapped (sold) is money down now for a promise to pay more money through time.

Said another way, notes and coins that you can spend now get swapped for the right to collect more notes and coins in any future.

On Inflation
=========

Inflation is a process used by those who control the economy to increase the Efficiency of Money.

The goal of inflation is to increase the growth of Commerical Credit for NEW OUTPUT of manufactured, mined and farmed goods. When this happens, we call this growth Economic Expansion.

Under Central Bank systems, Central Bankers use Inflation to cheapen the price of money hoping to expand Capital Opportunties through cash renting for manufacturing and production (mining, farming) purposes.

Inflation happens when those in power (Central Bankers) want to increase internal trade (Home Economy) through these: increased number of opened contracts, increased rate of cash payment for transaction settlement.

A wanted increase in Commercial Credit relative to Money is the wanted EFFECT of inflation.

Often an increase in now money is an effect of inflation that does not work as wanted.

On Money and Capital
=================

When Money Men swap money for right to collect more notes and coins in any future, money buys capital. Capital comes from cash rented (money down now) put to use for manufacturing, mining or farming.

Capital is not a thing that you have that you invest. There is only money, a commodity, which can be swapped for rights to other commodities -- wheat, corn, gold, shirts, pants, brake pads, future money. When men swap now money for rights to future money, we call those rights -- CAPITAL.

The man who buys capital, buys a right to claim either a stream of payment -- a bond -- or the payoff of a bet -- expected dividend. Capital comes from cash rented used for manufacturing, farming or mining.

The Cash Rentee who sells his rights to future income (Capital) gets cash down now sold to him from the Now Money Seller. Next, the Cash Rentee buys resources -- workers and their labor capital, metals, fuel.

The rate of growth of New Commerical Capital in ratio to the money base (notes and coins) is the True Inflation Rate.

Should inflation work, more New Issues of Preferred Stock, Commerical Paper and other investment instruments arise to attract Money.

Should inflation work, more folks gain goods and jobs as manufacturers, farmers, miners hire workers.

Likewise, Central Bankers use Deflation to raise the price of money in hopes of Recession (Excess Speculative Credit Shrinkage).

Using deflation, Central Bankers try to stop the growth of credit that gets put to use on ever crazier new product ideas.

When the growth of credit for bad ideas happens, circumstances become dire. When bad credit collapses, excess money made from credit must go somewhere and it does.

Those winners holding money from collapsed faulty credit bets bid up prices on existing things, resources which can become future inputs to manufacturing.

Money is the highest form of Credit and Credit is another word for Debt. Credit and Debt are other names for Capital.

The man who buys capital puts at risk his cash (now money of notes and coins). The danger the Capital Buyer faces is Total Loss less any insurance (side bet) and Return from Salvage at street prices for assets of the venture.

In the advent of the demise of a venture, the buyer of capital might get back some cash for assets to be sold under bankruptcy.

When credit relationships collapse and before the mad dash to bankruptcy, those who were first to get paid hold Actual Money.

When Big-time Money Holders of US Dollars cannot find new capital to buy, these High Rollers buy Futures Contracts on Resources. They use Actual Money to bid up prices on manufacturing factors, factors from farming and mining (oil, wheat, rice, timber, etc).

Holders of rights to real stuff (Sellers of Resources) believe they must get paid sooner rather than later. They lack belief in any future with Credit (=Debt = Capital) Relationships.

Prices rise because of the lack of quality Capital Opportunities -- new issues of preferred stock, infrastructure bonds, commercial paper-- and because of a lack of quality consumer loan cash rentees.

Always, someone gets paid with money from credit bets. Contractors and workers who built houses were paid. Lumber yards were paid. All were paid whether the price of houses went up or down, whether houses get sold or not.

Those who buy Capital from Builders or Bankers might not get paid. Builders could get stuck with houses that they cannot sell. Bankers who buy capital (house loans) from mortgagees (cash rentees) might not get paid.

Good Commerical Credit built the world folks. When the focus of credit becomes Consumer Credit or Speculative Credit, moneyquakes follow.

The Many confuse gambling (secondary market speculation that hopes for price appreciation) with investment (cash rented for return; aka capital in primary markets).

Speculating men corrupt capital. Gambling men pervert capital. Only Investors and Shopkeepers grow wealth and prosperity.

If you subtract 1% (optimistically presumed) economic growth from 17% money growth you are left with 16% inflation. Is that correct? Maybe Mogambu is an optimist!