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Milton J. Madison - An American Refugee Now Living in China, Where Liberty is Ascending

Federalism, Free Markets and the Liberty To Let One's Mind Wander. I Am Very Worried About the Fate of Liberty in the USA, Where Government is Taking people's Lives ____________________________________________________________________________________________ "Extremism in defense of liberty is no vice. Tolerance in the face of tyranny is no virtue." -Barry Goldwater-

Friday, January 11, 2008

The Horrors Of Inflation....

Is this inflation or just marketing?

First, what is inflation?
Inflation is defined as the increase in the price of some set of goods and services in a given economy over a period of time. It is measured as the percentage rate of change of a price index.

Mainstream economists overwhelmingly agree that high rates of inflation are caused by high rates of growth of the money supply.
What happens to an economy is when the supply of money grows faster than the amount of goods available, causing prices generally rise. This is a hard fact of economics and has been observed and measured even in ancient times such as Rome when emperors debased their currency by creating money by fiat to try to pay off debts greater than the taxes that they could collect.

So, what about inflation in Hong Kong? There are many instances of price increases, from food to housing.

However, one insidious inflation is one that promises to destroy the fabric of civil society here. My wife and her friends went to a store that specializes in underwear, observed and dutifully reported back to me that inflation has taken hold in bra sizes. Her friends, that are B cups, were now C cups in this new inflated world, and they quickly snapped up several examples of the inflated bras at the steep prices that this shop offers. What geniuses. Inflate the sizes and women fall over themselves to buy these new increased sizes!

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