Gottfried, re: what causes inflation?
No one knows. It's that simple.
Asking what causes inflation is, I think, analogous to asking what causes cancer. For example, some people say smoking causes cancer. But it doesn't. The most that can be said in that regard, is that there appears to be some type of association between smoking and cancer. The fact is, when it gets down to the real nitty-gritty, no one knows what causes cancer. Nevertheless, there has been much published material, especially in the popular press, about the causes and cures for for cancer. It seems that everyone has an opinion, but no real answer.
Similarly, there has been much published material in the form of speculation, research and opinion about what causes inflation. But as MrB so eloquently pointed out, what causes inflation is also an extremely complex issue. Historically speaking, it's interesting to study how fads in that regard seem to come and go.
Bottom line - IMHO, nobody knows the answer. Again, nobody. And I think even A. Greenspan would be the first to agree on that point.
I hope this "nonanswer" helps.
Ice |
