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More interesting to me, though, is one of the arguments we've heard over the years that Schiff here repeats. It is, in my view, a version of the worst argument in the world.
Mainstream economists (who hold sway in government, the corporate world, and academia) argued that as long as the labor market remained slack, inflation would not catch fire. My fellow Austrian economists and I loudly voiced the minority viewpoint that money printing is always inflationary-in fact, that it is the very definition of inflation.If Schiff, and his fellow Austrian economists, were right about this, there would be no question. The title of his piece, "Where is the inflation?" would have an obvious answer. It would be in the Fed's balance sheets, where we've seen a huge expansion of the monetary base.
But this is a mistake. Because, obviously, Schiff sees the problem for his worldview: the monetary base has expanded significantly (i.e. the Fed has "printed money") but inflation remains modest. These things, after all, are measured in different ways. So printing money is not, by definition, inflation.
But suppose it were true that inflation just meant the printing of money. Well, then the question would be, who cares? That means that we've printed lots of money, that is, expanded the monetary base. But to say that means we've also had inflation is to just repeat yourself, because they mean the same thing. What we want to know is if there are any negative effects of printing money--but having a definitional relationship tells us nothing.
What I think Schiff wants to say is that money printing always necessarily leads to inflation, that is, rising prices. And rhetorically, it's tempting to illustrate this necessity by appealing to, or declaring a, definitional relationship. But instead, this move actually negates any substantive assertion, and merely makes confusing use of words that have better definitions.
Inflation is the general rise in the price of goods and services across the economy. Printing money, or monetary expansion, is the macroeconomic tool that the Fed has of essentially increasing the supply of money ("money printing" is, of course, misleading because money is no longer just printed dollars and cents, but the term as metaphor is suitable). It does this by lowering interest rates or buying treasury bonds. Schiff might think that, always and in every case, monetary expansion leads to inflation. But if that even if that were true, they wouldn't mean the same thing.
Take another example, "the square root of 9" and "the sum of 1 and 2" are both necessarily 3. But that doesn't mean that the two phrases mean the same thing. Clearly they do not.
This argument even fails for Schiff on his own terms; if monetary expansion and inflation were the same thing, if one means the other, then there's no argument to be had. That might sound good for Schiff's case, but it really indicates that he hasn't made any interesting or worthwhile claims at all. He might has well have said, as philosophers are prone to, "all bachelors are unmarried men".
In fact, it's worse than this--the definition of bachelor is uncontroversial. But if you're introducing a definition that is controversial, for words that have perfectly good definitions already, you're just making matters more confused.
Once you realize this argument for the sham that it is, you realize that people use it all the time. But it's just a trick, an illusory argument. The reason I think it's the worst argument in the world is that it seems so powerful--relationships of necessity are important, and definitional necessity appears to be the strongest kind of necessity--but it is entirely vacuous.
Consider another example (courtesy of Derek Parfit in On What Matters). Some people think that "the morally right action" just means "the action that has the best consequences." These people think this is a declaration of the truth of consequential moral theory, but in fact it is the opposite. It means that moral theory is nothing more than consequentialism, which is just an assertion. Such an assertion could have no more meaningful effect on our lives than the realization that garbanzo beans and chickpeas are the same thing.
The problem for a consequentialist who held this view is that a non-consquentialist could completely agree. In fact, it's always a generous move in an argument to accept your interlocutor's definitions. So as before, I might accept that "morally right" means "having the best consequences", but any question I had about such actions with the best consequences (such as, is there always conclusive reason to act thusly?) would thusly apply to "morally right" action. I might ask, is there always conclusive reason to do what is morally right? Ought I do what is morally right?
Normally we might think that "what I have most reason to do" or "what is morally right" or "what I ought to do" all refer to the same concept.* But if I accept the consequentialist definition of "what is morally right", I have to use other (to me, synonymous) phrases to ask the pertinent question. If she chooses to define all of these phrases in her special way, she may do so, but she simply leaves her interlocutor unable to question what is most interesting--and not in a helpful way.
Definitions and words are just the tools with which we have arguments. But arguments are actually about the features of the world and the things that matter to us. You can adjust the definitions of the words to mean whatever you like, and it might seem like you're making a point. But really, you blur the intuitive connection that words have to the features of the world and the things that matter to us. And this makes argument less clear and less helpful, and our thinking more muddled.
What I've said here might seem to suggest that there's never any point in arguing about definitions. That's not quite correct--and I'll show why in a subsequent post(which--I anticipate--will be (even!) more interesting to readers than the topics covered here).
*Some people do not accept this. More on this later.