Voxiversity 5.2: Inflation and Keynesian Economics


This should be an interesting discussion. The conclusion will initially strike some as a priori insane, but I encourage everyone to consider the empirical evidence before issuing a diagnosis. I may need to revisit this one after the critics have shared their presumably constructive input, so I look forward to hearing everyone’s take on it.

In case you’re wondering why these esoteric and pedantic debates over definitions are of interest to me or why they are important, consider this recent interview with Ben Bernanke. The relevant statement is highlighted in bold.

Pelley: Some people think the $600 billion is a terrible idea.

Bernanke: Well, I know some people think that but what they are doing is they’re looking at some of the risks and uncertainties with doing this policy action but what I think they’re not doing is looking at the risk of not acting.

Pelley: Many people believe that could be highly inflationary. That it’s a dangerous thing to try.

Bernanke: Well, this fear of inflation, I think is way overstated. We’ve looked at it very, very carefully. We’ve analyzed it every which way. One myth that’s out there is that what we’re doing is printing money. We’re not printing money. The amount of currency in circulation is not changing. The money supply is not changing in any significant way. What we’re doing is lowing interest rates by buying Treasury securities. And by lowering interest rates, we hope to stimulate the economy to grow faster. So, the trick is to find the appropriate moment when to begin to unwind this policy. And that’s what we’re gonna do.”

It should be clear that the Fed Chairman does not define inflation in any of the Keynesian manners described in this video. But is his definition correct? That is the $600 billion question.

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Low hurdles

I was bemused when I checked Channel Vox this morning preparatory to uploading the next video in the inflation series and saw that it had won a YouTube award. It appears Voxiversity was #3 Most Subscribed Channel in Italia this week. Of course, I would have needed 360x more to have reached the same ranking in the USA. Clearly the next video should be entitled Victoria’s Secret Economics: Alessandra Ambrosio Explains Inflation.

But since I’m on the subject, I should mention there is a slight change of plans with regards to the 5.2 video. I am extremely loathe to make a case that depends upon anyone accepting my assertions undemonstrated, so the second video will not concern the credit-money definition of inflation as I’d originally planned, but will instead demonstrate the inutility of the four – yes, four – primary Keynesian definitions of inflation. The third video will examine the Monetarist definition, and only then, once the case against the various mainstream definitions is concluded, will I explain and defend my contention that the correct definition of inflation is an increase in the money supply plus outstanding debt.

Anyhow, I’m planning to do the recording tonight and upload it sometime this weekend, in case you’re interested.

Let’s try this again


I think it’s better this time. I’m getting more familiar with Camtasia, which tends to help, and the volume is significantly louder. I also managed to utilize the full screen this time instead of inadvertantly leaving a black rectangle around the perimeter. I also introduced minor errors into two of the graphs; the CPI recalculated for the 0.6% annual error only shows a line including a recalculation for the last ten years and the labels for the dollar devaluation chart were cut off, but I’ve decided to leave it as is so that I can move on to the next one. I found a better font to use for the pop-up notes as well, or “call-outs” as Camtasia calls them.

As before, suggestions for improvement would be welcome. The next video will address why inflation has to include outstanding debt; after that I plan to do videos examining the two conventional definitions of inflation. If you’re interested in being notified when new videos are uploaded, you can subscribe to the Voxiversity Channel.

A first whack

Don’t expect too much out of this little video on inflation and the CPI. It’s a first effort and I’m not shooting for professional quality or auditioning for a radio show here. The point is simply to transmit information in an alternative medium to the written text. I made a mistake in setting the screen capture size too low and I think I also neglected to spend enough time discussing what the CPI-U is; anyhow, I would welcome suggestions for improvement.

The Voxiversity YouTube channel is located here.

Dante’s Inferno cantos XXXIII and XXXIV

http://www.proprofs.com/quiz-school/widget/v2/?id=175917&bgcolor=c1d4ee&fcolor=2b405b&tcolor=2b405b

It’s long past time, but at last the intrepid Hellmarchers can complete their arduous march.

Dante’s Inferno cantos XXXI and XXXII

http://www.proprofs.com/quiz-school/widget/v2/?id=134466&bgcolor=c1d4ee&fcolor=2b405b&tcolor=2b405b

Finally… I made it a bit easier than normal since some of you haven’t read this for at least two weeks.

Dante’s Inferno cantos XXIX and XXX

http://www.proprofs.com/quiz-school/widget/v2/?id=128741&bgcolor=c1d4ee&fcolor=2b405b&tcolor=2b405b

We’re rapidly approaching the grand finale. Those Hellmarchers who have made it this far are to be commended… there’s no stopping now. Next week’s reading is cantos XXXI and XXXII.