The Inflation Crisis and how to resolve it essays

The Inflation Crisis and how to resolve it essays The first major issue described in this book is the question of the true definition of inflation and what misconceptions and misunderstandings surround the concept itself. Inflation is defines as an increase in the supply of money and credit (11). Yet, it is sometimes less commonly defines as the consequential rise of prices caused by the increase of money. One effect of inflation is the concept of supply and demand. As explained on page 12, a price is an exchange ratio between dollars and a unit of goods. When people have more dollars, they value each dollar less. Goods then rise in price, not because goods are scarcer than before, but because dollars are more abundant, and thus less valued. There are many different qualifications when inflation is to be considered. One such qualification is the question of future quantities of dollars. Also, when there is an issue of quantity, there almost always has to be the question of quality. If the public loses faith in the money or promises they have invested or currently have, they may turn to gold, for example, to contest their savings (14). One of the most astounding fact surrounding the issue of inflation is the period of time that this has been occurring in American history. As the book notes, many people believe that this is an issue only concerning the latter part of the 20th century, yet this is completely wrong. According to Hazlitt, the issue of inflation has been going on for over forty years. When comparing and contrasting the tables and charts given in chapter 2, one focuses of the negatively correlated index of consumer prices and the purchasing power of the consumer dollar. The following chapter analyzes the cause or to see where the blame is placed for the issue if inflation. Many people blame the politicians, while other blame consumers who most likely blame wholesalers or even retailer. One way the government tri...