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> Inflation is caused by a river of money poured into the economy. Supply&Demand forces then devalue the money, i.e. inflation. Inflation isn't a purely moneta
by sofixa 4y ago
> Inflation is caused by a river of money poured into the economy. Supply&Demand forces then devalue the money, i.e. inflation.
Inflation isn't a purely monetary phenomenon. You can have price increases resulting in inflation due to supply and demand issues in various products, and especially more so when the issues in question are a pandemic that disrupted supply lines and a war impacting energy and food exporters and thus prices. Combine that with the increased monetary supply and you have problems.
- WalterBright 4y agoInflation is a general price increase. That doesn't happen with disrupted supply lines. The proof of this is prices under inflation ratchet upwards - they don't come back down after the crisis is over.
- sofixa 4y ago> Inflation is a general price increase. That doesn't happen with disrupted supply lines Yes it does. If the supply lines impacted are critical (e.g. food or energy) every other product and service's prices will also increase because they're based on it. > The proof of this is prices under inflation ratchet upwards - they don't come back down after the crisis is over. That is usually true, but usually there is a general price readjustment - inflation ends at a certain place, but deflation isn't welcome so it never gets to that, monetary value and prices just stay at the new, stabilised normal.