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
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> Supply and demand of what exactly?
A lot of things.
> I understand food price going up but how does that relate to the value of currency
If the price of food goes up you can buy less food for the same amount of a currency. Ie the currency is worth less.
>If a recession hits us will it cause inflation to go down because people aren’t demanding as much
Usually yes but not always and it is often delayed a bit. Recession is when the GDP shrinks that first of all only means that less value is created. As a consequence companies that create less have less money to spend so they will “buy” less. Buy can also mean they will buy less workpower or in other words they will fire people who then also have less money to spend. So both will buy less, which is reduced demand.
Supply and demand are usually tied to each other but if suddenly one side increases or decreases very much in a short amount of time it will lead to problems. There have been severall events that have lead to global interuption of supply. Starting with Corona and shut down of factories world wide, the crash of the Evergiven in the Suez Canal and the Russian war against Ukraine (this had a very big impact on worldwide food supply and also energy supplies). Demand didnt decrease in those last years but supply did, so supply would need to make up (most of) the not produced goods to get back to “normal” but this just isnt possible.
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