What causes inflation in developing nations?

Question

What causes inflation in developing nations?

Answer 1

Lack of supply of goods cause the increase in prices.

Answer 2

Quite often, the printing press. Developing nations can run up their bills, so they print more money to pay for them. The money becomes worth less as a result, leading to inflation.

Answer 3

Inflation is a way for the government to take you money without 'Taxing' you.

It is a financial equivalent of making more punch by simply adding 7-up and diluting it.

This is how it works:

Let us say you have $1000.00. And legally government can take only 25% in taxes i.e. $250.00. However to run its non-productive programs the government needs half of your money. Government will simply print $500.00. Now you have $750.00 and the govenrment has $$750.00. The buying power of your $750.00 effactively went down by 1/3. So althought you now have $750.00 they are worth only $500.00.

Thus government took away half of your income without 'taxing' you as 50%.

This, my friend, is inflation.