Zero Inflation Essays - Inflation, Monetary Policy, Free Essays

Zero Inflation Essays - Inflation, Monetary Policy, Free Essays Zero Inflation Introduction Hyper inflation has plagued most of the worlds developing countries over the past decades. Countries in the industrialised world, too, have at times duelled with dangerously high inflation rates in the post WWII era. With varying degrees of success, all have employed great efforts to bring their inflation rates within acceptable limits. Generally, a moderate rate of inflation has been the ultimate goal. More recently, however, a few countries have pursued policies that strive to eradicate inflation altogether through complete price stability. This has proven to be a contentious enterprise, which clearly indicates that there is still no universally accepted solution to the inflation problem. Indeed, there is not even an agreed consensus regarding the source of inflation itself. The monetarist perception that the root of inflation is solely the excessive creation of money remains. So too does the belief that inflation originates in the labour market. And amongst a variety of others, th e opinion that inflation serves the critical social purpose of resolving incompatible demands by different groups is also strong. This last, and more widely accepted, case shows that the problem is hardly a technical one; but rather a political one. It highlights the now unquestionable fact that politics and inflation are inextricably linked. And as with all inherently political issues, consensus is difficult, if not impossible, to achieve. But, political characteristics do provide flexibility. In some countries, high rates of inflation have clearly been compatible with rapid economic growth and fast rising standards of living. In such cases, it is quite reasonable to suggest that higher rates of inflation are acceptableperhaps even necessary. In this setting, it is by no means clear that pursing a policy to stop moderate inflation is either required, or in the best interests of the mass of the population at all. While inflation guarantees that some will gain at the expense of others, the redistributions of income and wealth which do take place can, on normal value grounds, be quite desirable. In other circumstances, it may be quite desirable to place strict controls on inflation, or strive to keep it at zero level. Policies aimed at virtual price stability have been in use by central banks in Europe, New Zealand, and Canada over the past few years. Such policies have been particularly focused in Canada. As noted by Pierre Fortin, the only objective the Bank of Canada has pursued since 1989 has been to establish and maintain the inflation rate at zero level, which it sees as a CPI inflation rate that is clearly below two percent (italic added). To the surprise of many, it has been incredibly successful, achieving its objective several years before schedule. Although separated by only a few percentage points, Canadas policy is a sharp contrast to the moderate and balanced approach used in the U.S. Since 1989 the Federal Reserve has been satisfied with achieving an inflation rate of around 3 percent. In setting the interest rate, it has continued to pay explicit attention to real economic growth and employment, with the result that the U.S. unemployment rate is currently in the 5 to 6 percent range. Based on this statistic alone, it can be argued that the more moderate U.S. approach has enjoyed greater success than the deflation oriented policy pursued by the Bank of Canada: Canada continues to be burdened with a higher rate of unemployment. Yet, it continues to believe that the unemployment costs of low inflation are transitory and small . The directors of most European Central Banks also continue to support this dogma. Clearly, the credibility of the classical idea that the Phillips trade off between inflation and unemployment disappear s in the long run is still very high throughout the world. But, in Canada, as in most of Europe, the waiting continues. This is not to suggest that the waiting game has been silent and entirely pleasant. Indeed, the relative lack (or lag!) of success of zero inflation policies and strict price controls has spurred much heated debate. As a case in point, more people are curious why Canada has exclusively focused on inflation cutting and turned a blind eye to the more balanced, and arguably more successful, approach adopted by the U.S.. Is

Overview of Folk Etymology

Overview of Folk Etymology Folk etymology involves a change in the form or pronunciation of a word or phrase resulting from a mistaken assumption about its composition or meaning. Also called popular etymology. G. Runblad and D.B. Kronenfeld identify two main groups of folk etymology, which they call Class I and Class II. Class I contains folk-etymologies where some change has occurred, either in meaning or form, or both. Folk etymologies of the Class II type, on the other hand, do not usually change the meaning or form of the word, but function mainly as some popular, though false, etymological explanation of the word (Lexicology, Semantics, and Lexicography, 2000). Class I is by far the more common type of folk etymology. Connie Eble points out that folk etymology applies mostly to foreign words, learned or old-fashioned words, scientific names, and place-names (Slang and Sociability, 1996). Examples and Observations The process of altering otherwise incomprehensible words, in order to give them a semblance of meaning, is called folk, or popular, etymology. A product of ignorance, it nevertheless should not be underestimated as a factor of language history, for many familiar words owe their form to it. In kitty-corner, kitty is a jocular substitution for cater-. Cater-corner is an opaque compound, while kitty-corner (diagonally from) suggests the movement of a prowling cat. . . .Stepmother, stepdaughter, and so forth suggest the derivation from step. Yet a stepchild is not one step removed from its natural parent; -step goes back to a word meaning bereaved. Many people share Samuel Johnsons opinion that bonfire is a good fire, from French bon, but it means bonefire. Old bones were used as fuel down to the 1800s. The vowel o was shortened before -nf (a regular change before two consonants), and a native English word began to look half-French.(Anatoly Liberman, Word Origins: Etymology for Everyone. Oxford University Press, 2009) Woodchuck and Cockroach Examples: Algonquian otchek a groundhog became by folk etymology woodchuck; Spanish cucaracha became by folk etymology cockroach.(Sol Steinmetz, Semantic Antics: How and Why Words Change Meanings. Random House, 2008)   Female Historically, female, from Middle English femelle (from Old French femelle, a diminutive form of Latin femina woman/female), is unrelated to male (Old French male/masle; Latin masculus (little man/male); but Middle English femelle was clearly remodeled into female based on the association with male (approximately the 14th century) (OED). The remodeling of female brought female and male into their current and apparently sense-related and asymmetric relationship (one that many of us, now, are going to some lengths to unmake.(Gabriella Runblad and David B. Kronenfeld, Folk-Etymology: Haphazard Perversion or Shrewd Analogy.  Lexicology, Semantics, and Lexicography, ed. by  Julie Coleman and Christian Kay. John Benjamins, 2000) Bridegroom When people hear a foreign or unfamiliar word for the first time, they try to make sense of it by relating it to words they know well. They guess what it must meanand often guess wrong. However, if enough people make the same wrong guess, the error can become part of the language. Such erroneous forms are called folk or popular etymologies.Bridegroom provides a good example. What has a groom got to do with getting married? Is he going to groom the bride, in some way? Or perhaps he is responsible for horses to carry him and his bride off into the sunset? The true explanation is more prosaic. The Middle English form was bridgome, which goes back to Old English brydguma, from bride guma man. However, gome died out during the Middle English period. By the 16th century its meaning was no longer apparent, and it came to be popularly replaced by a similar-sounding word, grome, serving lad. This later developed the sense of servant having the care of horses, which is the dominant sense toda y. But bridegroom never meant anything more than brides man.(David Crystal, The Cambridge Encyclopedia of the English Language. Cambridge University Press, 2003) EtymologyFrom the German,  Volksetymologie