2 ms·
Not true -- inflation can be caused by multiple things, including supply shocks or even future expectations of inflation ("wage price spiral"). It's Econ 101.
by verteu 3y ago
Not true -- inflation can be caused by multiple things, including supply shocks or even future expectations of inflation ("wage price spiral").
It's Econ 101.
- WalterBright 3y agoYour Econ 101 professor is wrong. The proof is simple. Why did we not have deflation when the supply shocks ended? The value of money is subject to the Law of Supply and Demand like everything else is. Increase the number of dollars, and the value of a dollar goes down.
- verteu 3y agoProbably due to low unemployment [1]. Inflation has multiple causes. If it truly has a single cause ("creating money"), can you show a graph of "money created" vs inflation? I don't see much correlation between ∆M2 and inflation [2]. [1] https://en.wikipedia.org/wiki/Phillips_curve https://en.wikipedia.org/wiki/Phillips_curve [2] https://www.longtermtrends.net/m2-money-supply-vs-inflation/ https://www.longtermtrends.net/m2-money-supply-vs-inflation/
- WalterBright 3y agoLooks like they correlate to me.
- deleted 3y ago[deleted]