Inflation is not a general rise in the prices of goods; prices going up is merely one symptom of inflation.
Inflation is the expansion of the monetary base.OK, so since we're discussing inflation as an economics concept, it only makes sense as long as we keep to the economics definition of inflation. If you want to use your own definition, you're free to do so, but then the discussion leaves the mainstream economics domain, and you should be clear about that.
Definitions:
http://economics.about.com/cs/economicsglossary/g/inflation....
Inflation is an increase in the price of a basket of goods and services that is representative of the economy as a whole.
http://economics.about.com/od/helpforeconomicsstudents/f/inf...
A similar definition of inflation can be found in Economics by Parkin and Bade:
Inflation is an upward movement in the average level of prices. Its opposite is deflation, a downward movement in the average level of prices. The boundary between inflation and deflation is price stability.
http://en.wikipedia.org/wiki/Inflation
In economics, inflation is a rise in the general level of prices of goods and services in an economy over a period of time.[1] When the general price level rises, each unit of currency buys fewer goods and services.
How is inflation measured? Using Consumer Price Index:
http://www.bls.gov/data/inflation_calculator.htm
Printing dollars, for example, is inflation. The increase in prices is a result of inflation, and there are numerous effects other than prices going up.
According to whom?
It's critical in economics to separate supply & demand of goods causing increases or decreases in prices, from monetary changes. Free market forces are not the same as central bank forces.
Doesn't seem relevant.
There's about 200 years of modern economic evidence for how exactly inflation works and how central banks create it.
This would be a perfect place to cite some of that evidence.
I'll ignore the fact that the Fed has openly admitted it has devalued the dollar by 97% since its founding.
That's fine; I'm not sure what any sort of 'admission' may have to do with an argument at hand.
I'll also ignore the fact that Bernanke recently said it was the goal of the Fed to generate asset inflation via QE aka debasing the dollar (see real estate skyrocketing 10% again, or 22% in Phoenix (a disaster market recently), see stocks at all time highs again ala 2007).
No one argues that Fed can influence money supply, which can (hopefully) have effect on inflation. The relation is far from direct, however. Think of effects of other factors, for example increases in savings rate or decreases in productivity.
I'll also ignore the fact that Greenspan openly admitted the Fed has the direct ability to increase or decrease inflation, and can cause bubbles or pop them. He of all people should know.
This pesky "admission" concept again -- what does it have to do with anything? Copernicus admitted that earth did not revolve around the sun, he of all people should know.
It's not an assertion, it's a fact supported by extreme amounts of data.
And that's another assertion, so far also unsubstantiated.
If you increase the monetary base and money supply by hundreds of percent over a relatively short period of time, you're going to see a substantial increase in the price of goods in the currency in question. If you 'print' dollars to buy trillions in mortgages and remove them from the market, you're going to limit supply of housing and cause approximately $3 to $4 trillion worth of inflation in just one year (what's happening right now).
Isn't inflation measured in percent, not in trillions of $?
Not to mention simultaneously holding down mortgage rates via the government dominated mortgage market, by holding short term and long term interest rates artificially low by buying the paper that influences that. Then when consumers sell their homes, or take home equity loans, and then spend in any manner or buy anything else or loan their money to banks - the inflation gets discharged directly into the economy.
Not sure what "inflation gets discharged directly into the economy" means.
This is one simple example, there are countless. If today you have one trillion dollars, and tomorrow the Fed prints another trillion dollars, it's obvious what happens.
Actually, it's far from obvious. Unfortunately, we'll never know what would really happen, as Fed is not in the business of printing trillions of dollars. In any case, here's analysis of what would happen that somewhat goes along your apocalyptic scenario: http://krugman.blogs.nytimes.com/2011/03/25/deficits-and-the...
So not only do I have vast empirical economic proof not only do I have historical evidence for how it all works, not only do I have obvious math theory that is as simple as addition and subtraction, but I have the Fed openly admitting the scale of the inflation it has caused.
So far all you had were words.
How many proof articles would you like on the topic?
So far you failed to produce a single one.
