What is the cause of massive increases in prices?
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What is the cause of massive increases in prices?
Started by Murphy, Sep 10 2005 12:04 PM
1 reply to this topic
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Posted 06 September 2008 - 10:18 AM
TOO MUCH MONEY! The money supply in circulation causes price increases without true increased scarcity. This is a fairly easily created phenomenon. A central bank, ours is the Federal Reserve, allows banks to fractional reserve (laon more money then there is available), or the Central bank lowers interest rates, or merely prints more money. This increase in the money supply allows some to spend more money at first, creating a higher demand, driving up prices, then others have more money, etc, etc. Wages now need to go up (and some will in the initial industries due to increased profits) due to higher prices, now higher costs kick in, and the spirals begin.
But the cause is too much money.
But the cause is too much money.
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