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Cake day: December 27th, 2021

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  • Cyclohexane@lemmy.mlMtoMemes@lemmy.mlAlways has been
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    6 months ago

    You’re correct that inflation is the devaluation of money. The value of a unit of money is represented by what that unit can buy, so the person you replied to is also correct. This is why the most used indicators of inflation are measures of buying power.

    If my money is devalued, it means that when I was able to buy 1 gallon of milk, I can now only buy 3/4ths a gallon with the same amount.

    So while you’re correct in your over simplified example that inflation can be caused by the growth in “pool of money”, as you alluded, it is not that simple and its not the only cause. Moreover, inflation still manifests itself in the form of prices increasing. If pool of money grows, but prices remain the same, there’s no inflation.

    This does not necessitate a “canal of businessmen” conspiring.