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What is inflation?

What are the main reasons for inflation?

  • I know that printing money that is not based on any real source (ie. gold, gems,oil,etc) contributes to inflation, but what are some other factors that enter into it. But if that is the MAIN reason can you explain or direct me to a source or link to understand it better. For instance, I see that the Federal Reserve seems to be a major contributing factor in the US, but inflation seems to exist worldwide in all countries. Obviously our Federal Reserve is not responsible for all the worlds inflation. Do all these other countries engage in the same practice of printing currency out of thin air? If this didn't happen would there still be inflation? How would we go about making our currency MORE valuable in our own economy as well as on the global economic scene? I have SO many questions about this but i will stop here. If you can direct me to a link that explains this issue in detail that we most helpful. Thank you.

  • Answer:

    Two reasons,demand pull or cost push.

Zarathus... at Yahoo! Answers Visit the source

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Greed. If we applied the principle of the fair price and respected the prohibition of financial speculation provided in the Bible, then our countries could regain the prosperity they had when the economy was managed with protestant values.

no real reason just to get more defecit i believe.

zack

Dick

Inflation is a natural occurance, it changes when the reserve bank/govt introduces new fiscal (spending) or monetary (money supply) policies. Inflation is growth of an economy, positive is always better as it shows prices are increasing, that sound bad but its better than falling prices but thats another story. http://en.wikipedia.org/wiki/Phillips_curve above link shows the phiilips curve which is the main principle between infaltion and unemployment right now with the reccesion inflation is low and unemplyment is high (again this shows inflation is good) as no one wants to not have a job http://2.bp.blogspot.com/-cQ8rFBUYz_k/Tb-4vcfTaKI/AAAAAAAAAFg/2El8pk292j0/s320/Business_Cycle.jpg thats a pic of the bussines cycle showing how output falls (lower iflation) in the reccesion which is a bad thing message me if you need more clarification

Andy

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