This is not the canonical definition of inflation, nor has it ever been. An increase in the money supply is an increase in the money supply. Inflation is a rise in the prices of goods and services in an economy.

Austrians have tried to redefine the term, but referring to my aunt as my uncle doesn't cause her to grow facial hair and take an interest in football.

You guys are more than welcome to bring your own evidence, theories, and arguments to the table, but if we can't use the agreed-upon vernacular of the field of economics, we're not going to have a very productive discussion.


The price of the car is higher, therefore, there has indeed been inflation. But the rise in the price of the car does *not* track in any meaningful way with the increase in the supply of money.

In your particular example, you've not used the correct numbers, and your example assumes that the rate of increase in car prices tracks with the rate of increases of other prices of goods, which isn't the case.

$2,000 in 1962 is worth about $15,000 today, or an annualized rate of increase of about 4.25%. Econonists generally believe that inflation at this level can be useful to an economy, because it encourages people to put money into capital, investments, etc. rather than hoarding cash, which doesn't help an economy grow.

Obviously, runaway inflation is a bad thing, but we're not seeing that now, and the overall rate of inflation in the last 50 years is manageable.