Inflation wasn't invented by anyone, it's a natural phenomenon of economics, which is one of the fundamental characteristics of human activity. When too many dollars (or coin) are trying to buy too little widgets or cars or anything else, you get inflation. Think of it this way: All car manufacturers can produce a finite number of cars, let's say for this example, they can only produce half-million cars in a year. Then suddenly everyone in the country wakes up one morning to find a box of cash on their front doorstep, or perhaps deposited in their bank accounts. Too many dollars, and a fixed number of cars.
Suddenly everyone is "rich!" and everyone decides on that day to go trade in their clunkers and buy a new car. Overnight the price of cars would go from, say $50K to $300K, or more. Inflation. Everyone would be competing for a small number of cars and a bidding war ensues. Same with houses, or widgets, or anything else.
With dollars being pumped into the economy (or left in boxes on peoples' front porches, or put into central banks...) we get inflation. It's just a natural part of the economics of any nation, whether it's the USA or Venezuela or the EU.
Thanks for the info, fren. I just seem to differentiate in my mind between normal price increases (such as the supply and demand example you gave above), and inflation. I think inflation is mostly cause by the people using a fiat money system, interest, and a handful of other abstract principles. JESUS hated bankers and moneymen, and i have never shaken hands with anyone smarter than him!
Well, there are market forces that keep most producers from raising their prices in an inflationary way... if say carmakers #1, 2, 3, and 4 all raise their prices to some unreasonable price, then carmakers #5, 6, 7, and 8 can not do so and they will get all the sales, and the price-raisers will be stuck with cars they can't sell. Markets always control what companies can charge, and that's why monopolies are illegal and unwise.
Inflation wasn't invented by anyone, it's a natural phenomenon of economics, which is one of the fundamental characteristics of human activity. When too many dollars (or coin) are trying to buy too little widgets or cars or anything else, you get inflation. Think of it this way: All car manufacturers can produce a finite number of cars, let's say for this example, they can only produce half-million cars in a year. Then suddenly everyone in the country wakes up one morning to find a box of cash on their front doorstep, or perhaps deposited in their bank accounts. Too many dollars, and a fixed number of cars.
Suddenly everyone is "rich!" and everyone decides on that day to go trade in their clunkers and buy a new car. Overnight the price of cars would go from, say $50K to $300K, or more. Inflation. Everyone would be competing for a small number of cars and a bidding war ensues. Same with houses, or widgets, or anything else.
With dollars being pumped into the economy (or left in boxes on peoples' front porches, or put into central banks...) we get inflation. It's just a natural part of the economics of any nation, whether it's the USA or Venezuela or the EU.
Thanks for the info, fren. I just seem to differentiate in my mind between normal price increases (such as the supply and demand example you gave above), and inflation. I think inflation is mostly cause by the people using a fiat money system, interest, and a handful of other abstract principles. JESUS hated bankers and moneymen, and i have never shaken hands with anyone smarter than him!
Well, there are market forces that keep most producers from raising their prices in an inflationary way... if say carmakers #1, 2, 3, and 4 all raise their prices to some unreasonable price, then carmakers #5, 6, 7, and 8 can not do so and they will get all the sales, and the price-raisers will be stuck with cars they can't sell. Markets always control what companies can charge, and that's why monopolies are illegal and unwise.