I understand local inflation (at least I think I do). What I don’t understand is how we can have inflation being measured across the globe. If it is a closed system surely the amount of inflation somewhere is counteracted by deflation elsewhere?
What am I missing?
edit: source of global inflation:
[https://econ.trib.al/Vqhi0Ae](https://econ.trib.al/Vqhi0Ae)
In: Economics
I mean the answer is that there is no balancing mechanism here or anything, like you seem to feel their should be.
Inflation is when the prices of things get higher, obviously.
This can happen for two (super broad) reasons, including a mix of both
1. everyone just has more money but nothing else has changed. Like an extreme example would be if every single bank account in the world just was doubled in value over night. You would get inflation because everyone has twice as much money to spend, but there’s no new goods to buy so prices just go up and there is no reason there should be deflation anywhere.
2. Goods themselves have become more difficult to produce. For example if the climate gets worse and now everyone on the globe is able to grow less wheat the price of wheat is going to go up world wide. There is no mechanism here either that *forces* a counteractive effect anywhere. It’s entirely possible that a good becomes more difficult to produce everywhere.
That said having inflation in some areas and deflation in others *could* happen but by no means is it required.
I suspect there is a broader misunderstanding of economics here, I don’t mean that as an insult I think it would be nice to figure out what it is so you can walk away with an even better understanding.
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