"Prices" versus "Inflation"

Our objectives conflict. We want more growth, but not more inflation. However, when growth goes up, prices go up too. And when growth goes down, prices go down. Or at least that's how it used to work.

These days it's more like this: When growth goes up, inflation goes up; and when growth goes down, inflation goes down. This is not really the same thing, but that doesn't seem to bother anyone.

It should. It should bother you. It is a fundamental change in the way the economy works. But economists and commentators just use the word "inflation" now in place of the word "prices", and proceed as if nothing had changed.

Maybe we should try to figure out why that change occurred. Maybe that would help us understand the economic problem.

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Here, I'll give you a hint. Instead of going up and down, prices go up more and go up less, but always go up. HINT: There is more cost now, more than there was when prices went up and down. There is more cost now.

What is that cost?

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Here, I'll give you another hint: The cost of finance.