At first, I was going to email prof. Huerta de Soto, but then I decided not to because there is the risk that this is a stupid question. So, instead, I decided to ask it here. In any case, Huerta de Soto says that any credit expansion ends in malinvestment. Since ~1913, the United States’ economy has undergone a growth in the price level of ~3% on average. Of course, this inflationary growth is not stable, but the question is whether or not this long term price inflation, brought about by a constant increase in the money supply, will lead a long term contraction once the full effects on investment this average and constant increase in the price level will bring about.
Or, alternitavely, is this one of those scenarios in which the money supply has been distributed equally amongst all economic agents, and therefore does not catalyze a boom?
Using the price of gold 970 now and 18.93 in 1913 with 96 years of inflation I get 4.2% so the Crappy Price Index is wrong as usual. But I digress. No, there is no way to say the 96 years of money supply growth in the US will lead to a long term contraction as there too many things that happend in an economy. The most significant by far is that the progression of technology and the creation of new products hide the loss in purchasing power of the currency, a pound of tomatoes in 1902 cost 4 cents but now cost 1.00 dollars. The buyer is better off as technology made getting the tomatoes to the consumer cheaper. The other hiding place of resource misallocations through inflation is really bad and can never appear in a slow down or in any government statistic as the inflation effects are simply caught up in products that never are made. The other one already mentioned is a series of mild re-allocations instead of one whopper.
Inflation is calculated generally with consumer prices indeces for the price of gold in the contemporary world has little to do with the prices that consumers are paying for their goods, and it is the latter, not the former, infation that most are concerned about. In addition, data simply can’t be wrong in the respect you are speaking of.
Out of curiosity, do you actually agree with how the CPI is calculated? (the question of whether ‘price inflation’ can truely be accounted put aside for the moment)
Give me a break. The CPI is an indicator of cost of living changes. No one thinks it’s a perfect measure of inflation. Articles are written in top journals all the time saying why the authors think the CPI understates or overstates inflation. There is no perfect way to do it. Gold certainly isn’t the answer. The price of gold fluctuates for all sorts of reasons other than just money supply growth. Why don’t you just use your judgement and use several indicators if it matters that much to you? Complaining all the time just makes you look like a crank.