Inflation
Inflation is a general increase in the money supply.[1]
Definition of inflation
There is a certain confusion about the meaning of this term. In the popular definition, inflation is an ongoing rise in the general level of prices.[2]
Prices do not stay constant, they are always rising and declining. An increase in the money supply - inflation, properly defined - has a tendency to raise them in general.[3] It is also impossible to establish an average of prices of different goods and services.[1]
Effects of inflation
Increases in the money supply initiate an exchange of something for nothing. They divert real funding away from those, that generate wealth towards the holders of the newly created money. The general increases in prices, which follow, are a symptom of the erosion of money's purchasing power.[1]
See also
- Wikipedia page on Inflation
- Inflation from The Concise Encyclopedia of Economics
- What You Should Know About Inflation, Henry Hazlitt
References
- ↑ 1.0 1.1 1.2 Frank Shostak. "Defining Inflation", Mises Institute, posted on 2002-06-03, referenced 2009-05-26.
- ↑ Lawrence H. White. "Inflation", The Concise Encyclopedia of Economics, referenced 2009-05-26.
- ↑ Murray N. Rothbard. "11. Binary Intervention: Inflation and Business Cycles", Chapter 12—The Economics of Violent Intervention in the Market, Man, Economy and State, online version, referenced 2009-05-26.