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Inflation is money supply relative to the amount of goods and services. E.g. I have 500 cars in the economy and $1000 in circulation. Over time I grow the econo
by Manuel_D 5y ago
Inflation is money supply relative to the amount of goods and services. E.g. I have 500 cars in the economy and $1000 in circulation. Over time I grow the economy, and now I have 1000 cars, and I still only have $1000 in circulation. In this scenario we'd have deflation. To maintain an equilibrium I'd need to increase the money supply commensurately, to $2000. If I increased supply to $4000 I'd have inflation.
Japan's money supply growth is actually pretty constrained. From 2007 to 2017 it want from 713 trillion to 960 trillion as per the chart you linked. For the USA [1], money supply in circulation went from 7 trillion to 13.3 trillion and inflation is correspondingly higher [2]. Granted, this source doesn't include recent data around the pandemic, so it's of limited use for analysis existing inflation trends.
1. https://fred.stlouisfed.org/series/MYAGM2USM052S https://fred.stlouisfed.org/series/MYAGM2USM052S
2. https://fred.stlouisfed.org/series/FPCPITOTLZGUSA https://fred.stlouisfed.org/series/FPCPITOTLZGUSA