| Inflation is defined as a sustained increase in the general level of prices for goods and services. Under this definition, there cannot be inflation or deflation. The change is merely in the value of the currency. If an item cost 10 dimes one day and the next day that same item cost 20 nickels, there is no inflation just because 20 is more than 10. |  |
 | This general price level is for goods and services. Therefore, basically both the buyer and seller. Since the buyer and seller always match on price, there cannot be a general price increase. As productivity increases, the value of one’s labor and services increase. This manifest itself in both lower costs of goods and services they are providing and higher income for the person that is more productive. |
| Therefore, the general price when looking at labor and goods have to stay neutral. Any time the price to make an item drops, the price drops as well. Since every economic transaction has precisely the same amount paid by one as received by another, inflation is impossible. Surely, one commodity can rise or fall compared to others or the average. |  |
 | The key to currency is always to have the money backed-up by things of real value as in Haley2024’s Monetary Policy. Money should not be just pegged to gold or a basket of commodities. Instead, every coin or paper currency has real property in which it can be traded. Once traded in, we are left with less currency and also less property used for backing up the currency. |
| The value of the currency is always the value of all the property used to back up the currency divided by the number of units of that currency. If one adds currency and not assets to back it up, one simply changes the value of that currency. Instead of owning 1/100X of the property used to back up the currency, after adding 10% over 18 months, now the same dollar can demand only 1/110x of the same amount of assets. |  |
| If one had a large pile of Yard Sticks and were going to lay them down to measure a football field, it would take precisely 100 yardsticks. If the owner of the field, Fred Reserve, wanted to inflate or lengthen the size of the field, would Fred accomplish that by shaving off one inch from every yardstick and claiming his field is now 103 yards long because now it takes 103 Yard Sticks to reach across the field? The field did not get longer; the measuring sticks got shorter. The same applies to money. |  |
 | If one is using the un-backed-up money, it does not matter if the three apples are $3 or $300. It just matters that the person receiving the $3 can buy three oranges with that three dollars. If a person needs to pay $300 for three oranges, then he will sell his three apples for $300. |
| Two people agreed to trade three apples for three oranges. The next week the negotiation resulted in three apples for two oranges. The price of oranges went up by 50%, and the price of apples dropped by one-third. The result is one price falling and the other rising. The rise and fall precisely offset. Thus, the general price level stays the same. |  |
