This morning I attended a generally excellent seminar hosted by Vanguard. Vanguard are one of the foremost managers of index funds in the world. Their funds are useful and have very low costs.
The main speakers were Dr Peter Westaway Chief Economist Vanguard Europe and Dr John Velis, Senior Investment Analyst at Vanguard. Dr Velis was presenting about fixed interest investment. Overall both speakers were excellent and clearly seriously bright blokes. Dr Westaway has Three Degrees. His CV is here https://www.vanguard.co.uk/documents/portal/press_releases/peter-westaway-appointment.pdf
However, or rather, as ever, these people remain very confused as to what 'inflation' actually is.
In his presentation Dr Westaway seemed to say that inflation was the rise in prices, that is the RPI was inflation.
In his presentation, or rather in the questions, Dr Velis said that the increase in the price of equities could be attributed to inflation - as in the expansion of the money supply. Or rather that equities exhibited some automatic inflation hedging qualities.
So, either inflation is a function of money or it is a function of prices. I asked Dr Westaway this question and he insisted that inflation was the rise in prices, and qualified that by remarking that "anyway since we had not had much rise in prices then the expansion of the supply of money was not causing 'inflation'". At this point we were interrupted.
In any event in my view there have been considerable price rises - notably in land, commodities and financial assets, especially equities. Furthermore increases in the money supply take time to work through an economy (the pouring treacle analogy) and we may not yet see the effect generally.
I have increasingly noticed the circular arguments used by mainstream economists when talking about what inflation actually is. Have you?
Discuss.