I’m not sure if is the best place for this question, but it’s something I’ve only ever seen come up on this sub so hopefully it’s a good place for an answer.
Multiple times here I’ve seen people say that inflation is not a rise in prices. This is not how the word is normally defined or used, either by laypeople or economists.
What I’m trying to understand is where this idea comes from. Because clearly it’s coming from somewhere. Somewhere there must be people writing articles or having discussions where “inflation” is used in this specific way. A few times I’ve asked people where their definition comes from and been met by silence.
In: Economics
I’ve never heard this before, but as I held some beginners macro lectures, I can hazard a guess. Quoting the Wiki here: [https://en.wikipedia.org/wiki/Neutrality_of_money](https://en.wikipedia.org/wiki/Neutrality_of_money)
>Neutrality of money is the idea that a change in the stock of money affects only nominal variables in the economy such as prices, wages, and exchange rates, with no effect on real variables, like employment, real GDP, and real consumption.
ELI5: If a banana costs 2$ now, instead of 1$, it doesn’t matter, because if the prices rise, your employer should pay you double the wage. Then the real time you spend working for a banana is the same.
(This is a very simple approximation and is usually rejected on short timescales. You can read more on Wikipedia, it has quite nice explanations about this topic.)
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