WHY IS INFLATION A TAX? — PART 3

Citizen Tom

Four Horsemen of the Apocalypse, an 1887 painting by Viktor Vasnetsov. From left to right are Death, Famine, War, and Conquest; the Lamb is at the top. (from here (en.wikipedia.org))

Here is the third post in this series.

  • Part 1: Introduction
  • Part 2: How Much Money Do Our Leaders Want To Spend?

In this post we will consider why inflation seems to be such a complicated matter.

What Additional Factors Can Produce Inflation?

As we observed Part 1, inflation results when the money supply increases faster that the overall supply of goods and services. What does that mean? Well, even though the study of economics involves a lot of mathematics we don’t have to be mathematicians to understand the basic issues, but we do need to understand the terminology. So, here is some important jargon.

  • The money supply is the total amount of money—cash, coins, and balances…

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