4 ms·
What's interesting is that neither of those drive inflation. Inflation is the expansion of the money supply, and there is a sudden attempt to redefine it as inc
by ralusek 3y ago
What's interesting is that neither of those drive inflation. Inflation is the expansion of the money supply, and there is a sudden attempt to redefine it as increased costs of goods and services. Money supply goes up, costs of assets follow, then costs of goods and services, and then wages. None of the things downstream from expansion of the money supply "drive" inflation.
- WalterBright 3y agoThe most successful government propaganda ever is all the supposed reasons for inflation, anything but the real reason.
- sanderjd 3y agoNo, inflation is a generalized increase in prices / decrease in purchasing power for goods and services. Many people believe that this kind of broad increase in prices can only be driven by the expansion of money supply, but this is a contested thesis, not the definition of inflation. (For what it's worth, I tend to think it's correct.)
- 21eleven 3y agoI am not sure if this is accurate. I think money "throughput" matters more than absolute money supply.
- WorldMaker 3y agoThe voltage supply doesn't matter at all if the resistance or impedance of a circuit is wrong.
- wizofaus 3y agoExcept historically there have been periods where increasing the money supply hasn't driven up inflation particularly (because most of the increased supply was used to fund increases in productive output) and times where high inflation has been triggered without any significant increase in money supply (often due to unusual factors restricting supply of key goods/services). But at a sufficiently large scale, then sure, inflation will tend to follow money supply. But arguably such baseline inflation is largely a reflection of the fact that the overall output of the economy has grown, and not any indication of general decreased affordability.