Demystifying Inflation: What It Means and How It Works
Inflation is the decline in currency purchasing power accompanied by rising prices of goods and services.
Contrary to the belief that it is a natural occurrence, inflation is mainly driven by increased money supply, interest rate manipulation, and quantitative easing. This was evident when the U.S. government issued $931 billion in direct payments during the pandemic, leading to the highest inflation in decades. In June 2022, the Consumer Price Index rose by 9.1% year-over-year. The Federal Reserve raised interest rates to curb inflation, yet it remained above 3%.
According to economist Murray Rothbard, inflation results from expanding the money supply, particularly under a fiat currency system. Rothbard argued that fiat money, unbacked by physical commodities, allows unlimited money creation, leading to price increases and economic instability.
Clever Robot News Desk 11st June 2024
