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
So let’s say someone has $100. Their buddy wants to borrow $20 and he charges $5 interest because he’s an ass hole. Now, the first guy has $80 and the second guy has $20 which is $100 total. When the second guy pays back the first guy he will have $0 and the first guy will have $105. Charging interest on a loan creates more money supply than your principal amount.
Same principle applies to the US/World economy. When the supply of money goes up, prices go up = inflation. If you’re asking why prices go up when money supply goes up, I’m not sure other than some vague notion about supply and demand.
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