• utopianfiat@lemmy.world
    link
    fedilink
    English
    arrow-up
    3
    arrow-down
    1
    ·
    10 months ago

    Inflation is not growth in the money supply, money supply is one way that inflation can occur, but the basis of inflation is the increase in nominal costs of everyday prices.

    • Knock_Knock_Lemmy_In@lemmy.world
      link
      fedilink
      arrow-up
      1
      arrow-down
      1
      ·
      10 months ago

      Inflation is not growth in the money supply,

      It is caused by this.

      money supply is one way that inflation can occur,

      And the other is a reduction in quantity of goods and services.

      but the basis of inflation is the increase in nominal costs of everyday prices.

      No, that is the result of inflation, not the basis (reason).

      • utopianfiat@lemmy.world
        link
        fedilink
        English
        arrow-up
        0
        ·
        10 months ago

        It is caused by this

        And supply shock, and wage growth, and tons of other things. You literally said “inflation is an increase in the money supply”

        • Knock_Knock_Lemmy_In@lemmy.world
          link
          fedilink
          arrow-up
          0
          arrow-down
          1
          ·
          10 months ago

          Again, you are giving examples of price changes in specific goods, not inflation.

          Supply shock - is specific to the asset experiencing the shock. This is not inflation.

          Wage growth - the specific asset here is human capital.

          Inflation is when all prices increase, or equivalently, when the buying power of the fiat currency reduces. I.e. when more money exists than there was before.