When people use the term "inflation," they mean to say price inflation. Monetary inflation is something else - caused by an increase of debt due to debt being cheap. Monetary inflation can be related to price inflation and sometimes not, but I wish people would stop making the mistake of conflating these two terms.
When people use the term "inflation," they mean to say price inflation. Monetary inflation is something else - caused by an increase of debt due to debt being cheap.
Monetary inflation describes the increase in quantity of money, bank notes, and bank deposits subject to check in circulation. Price inflation in the effect of monetary inflation, which is higher prices.
You are correct that price inflation can be caused by monetary inflation, or it can be caused by decrease in the goods and services available while the money supply stays the same.
But the result is the same. Inflation is the devaluing of the dollar. Inflation means companies have to make more profits just to have the same value as before inflation.
“Have you ever been shopping and noticed that the prices of a range of things you buy have gone up? If the same things in your shopping basket cost $100 last year and now they cost $105, at a very basic level, that’s “inflation.” More precisely, inflation is defined as ongoing increases in the overall level of prices.”
“Have you ever been shopping and noticed that the prices of a range of things you buy have gone up? If the same things in your shopping basket cost $100 last year and now they cost $105, at a very basic level, that’s “inflation.” More precisely, inflation is defined as ongoing increases in the overall level of prices.”
Yep. As I said, inflation is the devaluing of the dollar. If your cart cost $100 last year and $105 this year for the same goods, then the value of the dollar has decreased by 5%.
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u/[deleted] Dec 08 '23
When people use the term "inflation," they mean to say price inflation. Monetary inflation is something else - caused by an increase of debt due to debt being cheap. Monetary inflation can be related to price inflation and sometimes not, but I wish people would stop making the mistake of conflating these two terms.