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Evidently not, because otherwise people would realize by now that inflation has causes beyond simply an increase in M1. Banks lend more money? Inflation. Econom
by kibwen 3y ago
Evidently not, because otherwise people would realize by now that inflation has causes beyond simply an increase in M1. Banks lend more money? Inflation. Economy-wide supply shocks? Inflation. Population decrease? Inflation. Money has a market value, and it drifts with supply and demand.
- WalterBright 3y agoCompare the increase in the money supply with the inflation rate. There's about a 13 month lag. > Banks lend more money? Inflation. People paying back loans? Deflation. It cancels out. Except the Fed loans out money and does not pay it back - inflation. > Economy-wide supply shocks? Inflation. Where does the extra money come from? And what about when the shocks end, why doesn't the price come back down? > Population decrease? Inflation. Reduction in demand means deflation.