I think I understand how new money is created (Central banks’ OMOs; fractional reserve banking; etc.). What I do not understand, on a very practical, every day level, is how inflation/money supply increases leads to higher prices. Is it because people who have taken on cheap credit go and spend eve…

Inflation, the creation of money and/or credit not backed by savings, will eventually lead to higher prices ALL ELSE BEING EQUAL. For example the massive increases in the money supply have not cause massive increases in prices in the USA and EU for a variety of reasons first and foremost is the incl…

Inflation and prices

Economics Economics Questions

John_James August 21, 2012, 3:20pm 2

It seems like this very question was posed just a few days ago. Have a look here and let me know if you need more outside of those resources.

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Inflation and prices

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