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Irving Fisher: 3 ideas worth knowing

3 ideas from Irving Fisher, each explained in a minute and credited to the original work. Free on Savvy.

• A pay rise that loses to inflation can still feel like a win

  People instinctively think in the face value of money rather than what it can actually buy, so a 3% raise during 5% inflation — a real pay cut — often still feels like good news, w…

  — Irving Fisher, The Money Illusion

• Irving Fisher's theory of how paying down debt can deepen a depression

  Irving Fisher argued that when over-indebted borrowers rush to sell assets and repay loans, the resulting fire sales push prices down, which raises the real burden of the debt stil…

  — Irving Fisher, The Debt-Deflation Theory of Great Depressions

• Double the money supply, and prices roughly double too, eventually

  The quantity theory of money holds that in the long run, growth in the money supply mostly shows up as higher prices, not more real output. Irving Fisher formalized this as an equa…

  — Irving Fisher, The Purchasing Power of Money

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