There is inflation all over world and ours is less than many countries. It is a world wide phenomena today,
Did all those countries print too much money? The price of goods can go up relative to a currency without it being inflation; you can have supply/demand issues (notably oil) that affect prices. The percentage increase in inflation is determined by the excess of new money created in excess of new goods and services created. So, there are a couple of parameters. Certainly Japan is the glaring example of one that didn't print a lot of money.
If the price of oil goes up you can have significant increase in the price of oil, and less significant increases in products that rely heavily on oil prices.
But when the value of money goes down (which affects everything), you're talking about inflation. A good example is rents; perhaps I rent an apartment for $1,000/month and suddenly the landlord says, "That's going to be $1,200 month next year". This is not because of the price of oil. There could be shortage of housing that could cause it, but those don't usually happen overnight.
A dramatic increase in housing costs, while food, gasoline, computer chips, pretty much everything, is increasing in price is what you'd call a "general price level increase" -- one that will be reflected, e.g., in the Consumer Price Index (CPI), and would be reflected in a "market basket" of goods, including food. This is not about the increase in prices of goods.
This type of increase in costs is about a reduction in the value of money. Why would money be worth less?
Because there is more of it, of course. If you print more money, each dollar is worth less -- all other things being equal. When you print dollars by the trillions, it is even worse. And when you are already in debt up to your eyeballs (which will require printing more dollars in the future) it can quickly become a crisis.
This is why for years we've been saying, "If you keep printing money we're going to have serious inflation". Well, that's where we are. If you look around, that is where a lot of countries are.
It is about supply and demand, but not of goods. It is about supply and demand for money, and money has gotten cheap because we print too much.
I don't think this is such a difficult concept that Koan and CJ can't understand it. But you have some dogma you have to cut loose to allow you some clarity. |
