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Comment by titzer | Hacker News Reader

Inflation is driven by monetary policy and both are symptoms of the exact same systemic problem he is describing. Inflation is a side-effect of increasing the money supply in order to generate more trade. More trade does not equate to more wealth or more goods or a higher standard of living.

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According to the view generally accepted in economics, more trade absolutely equates to more wealth.

"In every voluntary exchange we give up something we value less than what we receive... and so does the person we are trading with. Trade benefits both parties and this benefit is an increase in wealth for both."

http://www.fte.org/teacher-resources/lesson-plans/rslessons/...

1.) There are a whole lot of involuntary transactions in real economies. 2.) The argument only applies to perceived value, not wealth. Wealth is objective and measurable, e.g. the number of houses or cars or widgets in existence.

3.) Not all trades are created equal. Producing durable goods which last longer than nondurable goods creates more long-term wealth. E.g. the difference between a dozen disposable razors versus one high-quality razor blade.

A superset of the trade creates more wealth. That is, for two otherwise equal societies, A and B, where B trades does all the trade that A does, and some extra trade, then B is richer.

But merely "more trade" as in a bigger amount of money changing hands does not let one conclude anything.

Not sure we are in disagreement. The cause is monetary policy. More money equals growth in the economy it also causes inflation, forcing people to protect their money by investing.

This was not mentioned in the article. The need to make more money is a symptom not the cause.

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