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Non exhaustive list of things that drive inflation, ranked by how curious I find them: 1. A widespread belief that prices will increase (sometimes called inert
by rmellow 4y ago
Non exhaustive list of things that drive inflation, ranked by how curious I find them:
1. A widespread belief that prices will increase (sometimes called inertial inflation). This is also deeply tied to public trust in monetary policy.
2. Increase of prices to accommodate increase in uncertainty that a business plan will be fulfilled, for whatever reason (distrust in institutions, unpredictable government, decline of shared infrastructure).
3. Increase in "Monetary supply", aka how much money is available in the economy. This includes increased Government spending, printing bills and bank leverage (i.e. for every dollar deposited in banks, how many times was it loaned out to someone else?).