What causes INFLATION?

Question

i.e. the human/enviro. interaction that causes inflation

Answer 1

High debt and the weakening value of the currency .

Answer 2

There is only one source of inflation (when inflation is defined a persistent increase in the price of all goods and services): money supply growth. When the central bank creates more money and circulates it, the value of each dollar that already existed will fall (which means higher prices).

Answer 3

What Causes Inflation?  Money Supply Growth. You cannot inflate the currency unless you create more of it. When Paul Volker got us out of the inflation nightmare of the 70s what did he do?  He contracted the money supply. Dollars were removed from the US Economy. And without excess money, prices were forced to come down.

The root of all fiat currency inflation is Monetary Policy.

If we go back to Gold as Money, you cannot have inflation unless you dig more gold out of the ground.

Answer 4

Inflation is caused by many factors.

(1) Demand-pull nflation: this occurs when the demand for goods and services exceed supply. Notwithstanding the amount of dollars supplied in the economy, if peoples demand exceeds supply, prices must go up. Remember that suppliers will always like to supply more at higher prices. In hiking prices, suppliers will not consider whether there is high or low supply of dollars in the economy. They would always take advantage of high demand to increase prices.

(2) Cost-pust inflation: This occurs when the cost of production (prices of factor inputs) increases. Examples include high price of raw materials, high wage demand by labour etc.

(3) Imported inflation: This usually happens in import dependent states. If there is inflation in the countries from where they import their commodities, it spill over to their countries also.

They are many other factors which time and space would not allow me to exhaust here (now).