You are viewing a single comment's thread from:
RE: Brief reflection: Inflation myth
Inflation is the increase of the circulating money supply, but, the increase with respect to what? this is very important.
If the money circulating increases with respect to yesterday, that does not necessarily mean that there is inflation, in fact, this can generate deflation. Inflation depends on the circulating money supply in correlation to the goods and services offered.
That is, the money circulating is increasing faster than goods and services.
Something very important that must always be noted, is that inflation not only brings losers, because there is a group of people who benefit from the excessive increase in the circulating money supply, and this group is the one that introduces the money in the market (be the State or the Bank).
Currency is a reflection of the value in circulation. @vieira inflation is when there is more currency than the products, goods and services in the economy. Thus one or the other has to adjust. The currency always goes down in value and the products goods and services always remain the same. Thus it takes more currency to buy the same products goods and services.
This is why it is thefts. The labor forces pay doesn't adjust. So a laborer is paid at the lower value of the currency instead of the higher value of the currency. So his labor that produced the product, good, or service or distributed or sold it, that is drawing the value to the corporation is artificially lower because of the rising cost of the products, goods and services.
Such is shifting the value of the labor in a cheating way. Think about it like this you said you would take the job at 10 dollars an hour. When pay day rolls around they pay you 9 dollars an hour. Why people are not hanging is beyond me to explain.
I get what you mean, however, in praxis, most of the inflations are originated due to what I mention i.e. increasing the supply of money that circulates in order to pay the bankers debt :)