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It did cause inflation, but governments don't consider every price when calculating it. For instance the headline CPI rate doesn't include financial assets like
by native_samples 4y ago
It did cause inflation, but governments don't consider every price when calculating it. For instance the headline CPI rate doesn't include financial assets like equities, cryptocurrencies ... because "consumers" don't buy those, right?
- UncleMeat 4y agoIf inflation is a property of money itself, why would price increases only be visible in certain areas?
- native_samples 4y agoBecause the money is injected into the system at certain points and takes time to spread out. Like pouring water at high speed into a pond, it creates waves at the point of entry and even after you turn the water off it takes time to become stable again. "Classically" CBs inject money into the economy via purchasing financial assets. It gets filtered through banks and financial markets, so it's expected that this is where inflation hits first and hardest. Over time as people cash out of those rising assets the inflation spreads and starts warping the prices of other things like houses, degrees etc. The sort of inflation we're seeing now that also affects the prices of every day items is primarily due to lockdowns. CBs bought government bonds directly, which they'd been doing for a long time but they did so on a massive scale in order to fund support loans and stimulus cheques. But everything was shut down, so people just deposited those loans into their banks and had nothing to do with them except speculate on stuff like NFTs. Now the world is opening up again that money is getting withdrawn and spent on normal, every day items, some of which are also in short supply for lockdowns and war related reasons.