What is inflation and what causes it?

What would happen in your fish-egg scenario if the supply of eggs dropped to half the normal amount?

 

See my new post to you

 

I assume you mean this:
Demand outpacing supply is the general cause.
Inflation can happen in any type of economy.

Let's start at the begining. How do you define "inflation"?

 

I think it’s time for YOU to provide an explanation to this. I’ll be happy to comment.



Oh. I see you did.

 

I think the price of eggs to fish would change. Am I right?

 

In simple terms.
The increase in the cost of goods and services.
Which could have many reasons for it.

 

I would think the same.
Inflation in the price of eggs due to less supply.

 

well as we saw with covid, a reduction in supply can cause inflation due to not meeting demand

if the corps do not lower prices back down when supply increases, and people still buy... you have inflation

 

So eggs now cost two fish instead of one. And fish costs 1/2 eggs.

One price went up, and one went down. Where is the general rise in prices?

 

How many threads are you going to open about the same question?

 

I agree with your definition of inflation. With inflation, price increases happen automatically. But with zero inflation, you could still have price increases due to the laws of supply and demand. So in a "barter" economy, if you grew tomatoes, you could trade a certain amount of them for a certain amount of milk. But if you had a bad year for growing tomatoes, and the demand for tomatoes outstripped your supply of tomatoes, you could raise the price of your tomatoes. The guy who produced milk would have to give you more milk for the same number of tomatoes. That is not inflation; that is just the law of supply and demand.

So inflation causes price increases. But the law of supply and demand can also cause price increases, or decreases.

 

Isn’t that kinda sorta what happened in Venezuela regarding oil? ….-except they were using, and ARE using, a currency.

 

I agree. So the price of tomatoes vs milk changes. It's not iflation, just a change in prices.

 

Perhaps 47? But I'm not sure.

 

Pardon, but inflation IS “price increases”.

If you think that “with inflation, price increases happen automatically”, then tell me how price tags automatically change in the stores. Do they have a mind of their own?

Then you can explain the following for me…..
https://accountable.us/wp-content/u...-01-Research-on-SP-500-2022-Profits-FINAL.pdf

https://www.commondreams.org/news/companies-admit-prices-profits

And finally…

 

Have we agreed on a definition of inflation? I thought we did. I thought we agreed that is was an increase in the money supply, which because of the economic laws of supply and demand reduces the price of money.

 

Inflation = a general increase in prices and fall in the purchasing value of money.

So we have
1. Inflation by increase in money supply (printing)
2. Built In inflation (caused by rapid increase in wages)
3. Demand Pull Inflation (caused high demand with low supply)
4. Cost Push Inflation (higher costs of production decrease the aggregate supply)

 

Inflation = a general increase in prices and fall in the purchasing value of money.

So we have
1. Inflation by increase in money supply (printing) Increasing the money supply == inflation
2. Built In inflation (caused by rapid increase in wages) Not inflation. Change in prices.
3. Demand Pull Inflation (caused high demand with low supply) Not inflation. Change in prices.
4. Cost Push Inflation (higher costs of production decrease the aggregate supply) Not inflation. Change in prices.

 

"What Is Inflation?
Inflation is a rise in prices, which can be translated as the decline of purchasing power over time.”
https://www.investopedia.com/terms/i/inflation.asp


"What is inflation?
Inflation is an overall increase in the prices of goods or services in an economy.”
https://usafacts.org/articles/what-is-inflation-and-how-is-it-measured/


”Definition of Inflation
28 July 2021 by Tejvan Pettinger

• Inflation is a situation of rising prices in the economy.
• A more exact definition of inflation is a sustained increase in the general price level in an economy.”

https://www.economicshelp.org/macroeconomics/inflation/definition/

It’s all about prices.

 

Neat. So let's take an economy with two goods. Apple and bananas. Can you describe to me how the price of both of those goods can increase?

 

And in every case no price can be increased without human intervention. A PERSON must raise the prices on price tags in the stores due to prices being increase BY DECISIONS OF PEOPLE at the corporate level.

Contrary to the beliefs of some, prices cannot raise themselves.

 

No, let’s take an economy with another kind of unrealistic fantasy…-MAGIC. How do price tags change themselves?

 

There’s no need to speculate about hypothetical over-simplifications when we have plenty of reality to look at. But to play your game, both could experience price increases THAT ARE JUSTIFIED by the money supply being increased. And yet, the increase in the money supply may be questionable and unjustifiable.

 

Sometimes smaller models are used to teach economics. But pearls before swine, as the saying goes.

And I agree with you that price tags don't change themselves.

 

So are you saying that inflation is an increase in the money supply?