very interesting..Inflation is often mixed up with rising prices, but those are only the consequence of inflation. Essentially, inflation is a monetary phenomenon. It reflects the amount of money in circulation: if that increases, inflation goes up. The ultimate effect of increasing prices is logical, as more units of a variable asset (money) are around in comparison to a fixed asset (e.g. commodities). This results in the need for more units of the former, to get the latter. Those who want to know how much money circulates may want to ask the central banks, as their balance sheet is largely representative. And because America is the supplier of the world reserve currency, the balance sheet of the Federal Reserve is the ultimate measure of inflation.
Posted on: Tue, 03 Dec 2013 05:20:50 +0000