The article below refers to the commonly held view that 'inflation' is 'an increase in an economy's overall prices. '
This is a weak, or at least inadequately explained, spot in Austrian theory, imo. Austrians maintain that the inflation has already occurred - but they're defining 'inflation' the old way, the Austrian way, as 'an increase in the money supply.' They also say that price increases are inevitable when money supply increases come faster than productivity advances. Where are these inevitable price increases? It bothers me.
Austrians complain that governments adjust their respective CPI formulae periodically, so price 'increases' become difficult or impossible to see.
They argue that the CPI doesn't measure overall prices... since such a measurement is impossible to obtain. The price of every item at a given instant would need to be known and included in the calculation.
And they argue that price increases can be postponed, but not avoided, when debt mounts.
Okay. So where are the draconian price increases? Yes, gold prices.... and a few other things.... are up... but they're a miniscule part of overall prices. Have the increases been postponed? Sure, but year, after year, after year, after year? For how long do Austrians think can this possibly continue? Such a long stretch where overall prices have not turned into the smoking gun of a mismanaged economy make me wonder what it is that I'm missing.
Why are debt holders continuing to tolerate such low interest rates? Who ARE the debt holders these days? I expect that as long as they continue to buy all the debt being issued around the world at low interest rates, prices CAN stay flat. What catalyst will compel them to stop buying?
And no, before anyone asks, I am NOT beginning to think that the system actually works. I'm just venting... brainstorming... wondering why it is that things haven't yet come to a head. For how much longer can this continue?
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