I did a quick google and it said because demand is out stripping supply for goods and services. I would have thought supply and demand was never static at any time. Why is it a massive issue now? Supply and demand of what exactly? I understand food price going up but how does that relate to the value of currency? If a recession hits us will it cause inflation to go down because people aren’t demanding as much? Do more people have more money causing higher demand? Thanks for your expertise
In: 43
Same reason every country that has inflation has inflation – central banks and governments have expanded the money supply.
Australia’s money supply has expanded 6.7% from March 2022 to March 2023.
Production has increased 2% in the time.
I guess you could call that a “supply chain issue” but to call it that its effectively saying “we didn’t build 7% more mines, farms, and factories and get 7% more workers to work them”. If you call it a monetary issue then it’s “We increased the supply by 7% when we really should have increased it by about 2%”
Look at the M2 for any country struggling with inflation. Look at the M2 for any country not struggling with inflation.
Latest Answers