Inflation, is the simple answer. But what causes this? Why couldn’t society just keep on keeping on with prices? Examples, a $0.25 for a candy bar, $0.75 for a fast food burger, $30k for a home etc. It worked then, so why not now, why not just agree to lower the prices of everything?
In: Economics
The “economy” isn’t about money, it’s about stuff – it’s always and only about the stuff. Most people don’t want more green paper, they want more food, more entertainment, more products, more medicine and etc.
Even when governments print more money, there is the same amount of “stuff” available. There are only so many doctors who can work so many hours. There are only so many TVs and there is a limited amount of food.
When you print and give out money to people, it doesn’t (immediately) change how many doctors are available, or how many TVs can be purchased. Each personnow has more money and is now willing to pay slightly more to get what they want.
The purpose of an economy is twofold:
– Determine who gets the limited amount of resources currently available.
– Shift production to produce more of what’s important.
Latest Answers