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The increase cost of goods and service is not the cause of inflation, it is the definition of inflation. The cause is increased supply of money along with velo
by starkd 4y ago
The increase cost of goods and service is not the cause of inflation, it is the definition of inflation. The cause is increased supply of money along with velocity of money.
- acuozzo 4y agoWould inflation occur if all companies decided to act together patriotically and not increase what they're charging in response to the increased money supply? > it is the definition of inflation Doesn't the definition of inflation have more to do with the decreased value of currency? There are plenty of uses for currency outside of the purchase of goods and services.
- s1artibartfast 4y agoYes. If buyers have cash piling up and companies magically decided to hold prices, the cash would just flow into whatever could be still be bought, probably housing. In reality, the only thing that puts downward pressure on prices is if people cant afford them.
- acuozzo 4y ago> the cash would just flow into whatever could be still be bought, probably housing How would this decrease the value of the currency? It would certainly reduce asset availability, but— to use your example —there's an absurd surplus of housing nationwide.
- s1artibartfast 4y agohousing is one factor in tracking the value of a currency. Assume we freeze the prices of consumer goods, cost of housing still figures into your budget and cost of living. >It would certainly reduce asset availability, but— to use your example —there's an absurd surplus of housing nationwide. I cant relate to this idea of an absurd housing surplus. It simply doesn't match m understanding of reality. Housing prices have gone through the roof almost everywhere people want to live.