> when prices go up without real values changing
So in your model, why does this happen?
In the classic Friedman model it's because the money supply has increased. In your model, it just happens for no reason?
So in your model, why does this happen?
In the classic Friedman model it's because the money supply has increased. In your model, it just happens for no reason?
We know the market is complex and with cyclical components and resonances at various frequencies. We know of the feedback loops caused by expectations driving self-fulfilling prophecies. We know of its fractal and stochastic nature. We know it's almost never a simple cause-and-effect relationship -- rarely is a market participant strong enough to wrestle on even terms with everyone else.
The aggregate price level depends on the amount of circulating money. When gas prices go up, we have less to spend on other items, which then fall in price.
Milton Friedman figured this out in the 50s, which led to his Nobel prize.
In fact, whenever someone purchases or sells something, there are two objects being exchanged. One is a currency and the other being the object of sale. Supply and demand for the currency affects the price just as much as supply and demand for the thing being sold.
That's all I'm saying. It's very hard to convincingly put a direction on quantities so tightly intertwined.
I don't mean to pick on you personally, but I don't know any other field where educated people are so happy to believe their hunches over the established science...
Saying that economists figured it out is a bit like saying "doctors figured blood-letting out 200 years ago". As true as that may be, we know today whatever it was they figured out is complete garbage.
What am I missing?
Which scholars are you referring to?
Putting "Economists" in quotes and comparing them to blood letting doctors doesn't really shake my impression that you don't really respect this field of science :)
I'm still not ready to write them off, in part because of the bias against professional economists you've already caught me exhibiting. But I can admit at this point that it's completely based on personal whim and not much actual substance, as long as the substance is determined by mainstream economics.
I'm a "hard science" guy. My degree is in physics and I work writing software. But last 1-2 decades I've found economics to be the most interesting science there is, since it makes me understand society much better than I used to.
This philosophy of viewing currency itself as subject to supply/demand is literally one of the insights that led to Friedman’s philosophy. For example see the Great Depression where an insufficient supply of money was one of the primary factors.
(See https://en.m.wikipedia.org/wiki/Causes_of_the_Great_Depressi...)