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Inflation is a monetary phenomenon. Prices are rising in Australia because the Central Bank created $450billion out of thin air during the pandemic [1]. The ban

Inflation is a monetary phenomenon. Prices are rising in Australia because the Central Bank created $450billion out of thin air during the pandemic [1]. The bank has persistently kept interest rates low, creating a massive housing bubble [2]. For everyone saying there was 'low' inflation in the 2000s despite cheap money, remember that China and Asia were rabidly growing, flooding the world with cheap manufactured goods and lowering real prices (often 10x reduction). The inflation can still be seen when looking the price of Australian real estate, or stock markets such as Nasdaq. As for this article, companies would always like to increase prices and profit. They can only do so in unison if there is suddenly more money sloshing around. [1] - https://www.rba.gov.au/chart-pack/central-bank-balance-sheets-bond-purchases.html https://www.rba.gov.au/chart-pack/central-bank-balance-sheet... [2] - https://www.rba.gov.au/publications/bulletin/2012/dec/images/graph-1212-2-04.gif https://www.rba.gov.au/publications/bulletin/2012/dec/images...

dyno12345 4y ago
inflation is any time prices increase. there are multiple reasons why prices might increase.
- thaumasiotes 4y ago
  There are two possible reasons: - The supply of money goes up. - The demand for money goes down. Neither wages nor profits are capable of affecting the supply. They might affect demand somehow, but it's not the first thing you'd look at.
  - xyzzy123 4y ago
    Doesn't the supply of stuff also matter? How about people's expectations of future prices? How about global-market linked prices of economic inputs, foreign money supply creation? Etc. I think I could come up with 50 reasons why prices might increase if I sat down long enough.
    - thaumasiotes 4y ago
      > Doesn't the supply of stuff also matter? It matters. > How about people's expectations of future prices? These also matter. Now ask yourself how they matter. Any fall in the value of money must come from an increase in supply or a decrease in demand. If we expect future prices to be much higher than they are now, we will seek to hold less money (because its value in the future is lower) and this drop in the demand for money in the present will drive down the value of money in the present.
    - stephen_g 4y ago
      Yes, understand what the parent is putting forward is a fringe theory. Some schools of economics like Austrian economics are obsessed with the money supply and ignore other factors that clearly matter a lot.
      - thaumasiotes 4y ago
        Before you describe something as a "fringe theory", you might want to check whether it is taught by major textbooks in the field. (In this case, try reading https://www.macmillanlearning.com/college/us/product/Macroeconomics/p/1319263909 https://www.macmillanlearning.com/college/us/product/Macroec... )
- refurb 4y ago
  No its not, it’s a sustained increase in prices across the board, i.e. devaluation of money Oil prices going up and causing food prices to increase is not inflation.

dyno12345 4y ago

inflation is any time prices increase. there are multiple reasons why prices might increase.

thaumasiotes 4y ago
There are two possible reasons: - The supply of money goes up. - The demand for money goes down. Neither wages nor profits are capable of affecting the supply. They might affect demand somehow, but it's not the first thing you'd look at.
- xyzzy123 4y ago
  Doesn't the supply of stuff also matter? How about people's expectations of future prices? How about global-market linked prices of economic inputs, foreign money supply creation? Etc. I think I could come up with 50 reasons why prices might increase if I sat down long enough.
  - thaumasiotes 4y ago
    > Doesn't the supply of stuff also matter? It matters. > How about people's expectations of future prices? These also matter. Now ask yourself how they matter. Any fall in the value of money must come from an increase in supply or a decrease in demand. If we expect future prices to be much higher than they are now, we will seek to hold less money (because its value in the future is lower) and this drop in the demand for money in the present will drive down the value of money in the present.
  - stephen_g 4y ago
    Yes, understand what the parent is putting forward is a fringe theory. Some schools of economics like Austrian economics are obsessed with the money supply and ignore other factors that clearly matter a lot.
    - thaumasiotes 4y ago
      Before you describe something as a "fringe theory", you might want to check whether it is taught by major textbooks in the field. (In this case, try reading https://www.macmillanlearning.com/college/us/product/Macroeconomics/p/1319263909 https://www.macmillanlearning.com/college/us/product/Macroec... )
refurb 4y ago
No its not, it’s a sustained increase in prices across the board, i.e. devaluation of money Oil prices going up and causing food prices to increase is not inflation.