Why do we have inflation ?

[Dr.Bitcoin_Strange]

When it comes to inflation, it is important to investigate the concept of "clinging prices." This relates to how difficult it can be for pricing to respond rapidly to economic changes. For example, organizations may need time to adjust their prices in reaction to changes in demand or costs. In the meantime, this may generate inflation. This occurs when the costs to produce items and services rise, as shown in changes in the pricing of goods and services, changes in consumer demands, as well as shifts in the world's economic situation.

[Peter90]

"Printing money is necessary in order to stimulate the economy"



 

J. Milei, Argentina's President, libertarian

[DrBeer]

"Printing money is necessary in order to stimulate the economy"



 

J. Milei, Argentina's President, libertarian

I would put it a little differently Forced additional issuance not only helps solve some problems in government funding, but also stimulates the economy to act. However, it also partially stimulates people to find a better use for their money than keeping it "under the mattress", which also leads to the transfer of this money into the economy and promotes consumption of goods and services.

[KingsDen]

The only reason why we have inflation, is because they keep printing money ... and there's no one to stop these damn politicians & bankers ...
It's pure theft.

Any activity that involves pumping money into the economy might lead to excess supply of money in circulation which often results in inflation. Most times, the supply of money in the form of government borrowings and expenditures are necessary for the development of the country but as we know what has an advantage also has a disadvantage. Despite the fact that the money in circulation helps in developmental projects, it also results in inflation when the Money in circulation becomes excess and most government policies are not strong enough to tackle the issue of inflation.

[Altcoin1998$]

The only reason why we have inflation, is because they keep printing money ... and there's no one to stop these damn politicians & bankers ...
It's pure theft.

We consider inflation rate according to my country native currency with dollars ..

2018, BDT 75@1$
2020, BDT95@1$
2024, BDT,124@1$
The inflation rate is constantly increasing in my country, the main reason is that the government is always secretly and secretly printing money to pay the foreign debt, as a result, the amount of money in the country has increased due to money printing, but the inflation is constantly increasing due to the foreign policy not matching the quality of the country's economy. .

[Peter90]

We consider inflation rate according to my country native currency with dollars ..

2018, BDT 75@1$
2020, BDT95@1$
2024, BDT,124@1$
The inflation rate is constantly increasing in my country, the main reason is that the government is always secretly and secretly printing money to pay the foreign debt, as a result, the amount of money in the country has increased due to money printing, but the inflation is constantly increasing due to the foreign policy not matching the quality of the country's economy. .

Hi Altcoin
in order to show the devaluation of a currency (in this case the BDT) you have to compare it with a stable currency.
The $ is not a stable currency




You write
2018, BDT 75@1$
2020, BDT95@1$
2024, BDT,124@1$
... but that 1$ in 2018 wasn't the same 1$ in 2020, and the 1$ in 2020 wasn't the same of the 1$ in 2024.
The purchasing power of that 1$ changed.


If you want to have an idea of the inflation in your country it's better to compare the BDT with a stable currency like the Singaporean dollar, for example, or with gold (my favorite)



So, comparing BDT with 1oz of gold, we have
2018 BDT 110k@1oz
2020 BDT 130k@1oz
2024 BDT 240k@1oz
That's a more accurate picture of how your currency is depreciating.

If you look at those numbers in % you'll see that comparing the BDT vs. $ it looks like the BDT has lost less than 50% of its purchasing power in 6 years, but that's not accurate.
Comparing the BDT vs. a stable currency like gold you can in fact see that the BDT in the last 6 years has lost more than 50% of its purchasing power.

[DrBeer]

The only reason why we have inflation, is because they keep printing money ... and there's no one to stop these damn politicians & bankers ...
It's pure theft.

We consider inflation rate according to my country native currency with dollars ..

2018, BDT 75@1$
2020, BDT95@1$
2024, BDT,124@1$
The inflation rate is constantly increasing in my country, the main reason is that the government is always secretly and secretly printing money to pay the foreign debt, as a result, the amount of money in the country has increased due to money printing, but the inflation is constantly increasing due to the foreign policy not matching the quality of the country's economy. .

Question - and how does the government pay the EXTERNAL debt by printing new money ? Having printed local currency, the government has to use it to buy dollars/euros/yuan (depending on the currency of external borrowing) and give it to the creditor. The "printed local currency" remains in the hands of the person who sold the currency. And it is not very profitable for the holder of the local currency to create inflation with these sums of money, because it is he who will be the first to suffer. I think there is some other reason for inflation..... Most often it is really "printing money out of thin air", but not to pay off foreign debts - but internal obligations - from domestic loans to social payments. And then, indeed, the excess money supply ends up in the domestic market, which leads to devaluation.

[Mr. Allcrypto]

Inflation is a word used to describe the successive increase in the prices of goods and services, but saying that printing money is the cause of inflation is wrong, as the market needs printing money and controlled inflation to grow. Most economies indicate that inflation of 1% to 2% is good for the economy, but excessive inflation that The problem is not controlled by the central bank, as the prices of goods and services continue to increase, which affects the economy and has reasons:

Random printing of money.
Wrong policies of the central bank.
Corruption, government laxity, and spending on projects that are not economically feasible.
Inflation due to fuel prices or supply chains.

If the government does not print money, inflation may occur due to the reasons above.

isn't the money printing what devalues the existing money on the market
These last few years money printing have gone brrrr ... so did inflation.

The money printing too is a key factor of why we have  inflation, but also there are some government policies too that affect the economy and bring rise of inflation in the country...
When the demands of goods and services are very high in a country and the quantity of it is very small then inflation will surely take place, taking for example if althea government lay down policies that affect importing of a particular goods that the demand is very high, it will lead to inflation and the prize of that product will increase...

[Peter90]

"Printing money is necessary in order to stimulate the economy"



 

J. Milei, Argentina's President, libertarian

I would put it a little differently Forced additional issuance not only helps solve some problems in government funding, but also stimulates the economy to act. However, it also partially stimulates people to find a better use for their money than keeping it "under the mattress", which also leads to the transfer of this money into the economy and promotes consumption of goods and services.

I'm a libertarian
I love freedom

I think people shouldn't be "stimulated" to take their savings out from under the mattress and invest them otherwise those savings get destroyed through inflation.

Investing means risk.
I don't like seeing people - ordinary people. Financially unsophisticated people. Pensioners. Poor people. People who have no idea how to invest - I don't like seeing these people being forced to take risks in order to protect their savings from inflation.

I think people should do whatever they want with their money, without being pressured, without being "stimulated",
and I think monetary authorities should stop devaluing people's money.

[DrBeer]

"Printing money is necessary in order to stimulate the economy"



 

J. Milei, Argentina's President, libertarian

I would put it a little differently Forced additional issuance not only helps solve some problems in government funding, but also stimulates the economy to act. However, it also partially stimulates people to find a better use for their money than keeping it "under the mattress", which also leads to the transfer of this money into the economy and promotes consumption of goods and services.

I'm a libertarian
I love freedom

I think people shouldn't be "stimulated" to take their savings out from under the mattress and invest them otherwise those savings get destroyed through inflation.

Investing means risk.
I don't like seeing people - ordinary people. Financially unsophisticated people. Pensioners. Poor people. People who have no idea how to invest - I don't like seeing these people being forced to take risks in order to protect their savings from inflation.

I think people should do whatever they want with their money, without being pressured, without being "stimulated",
and I think monetary authorities should stop devaluing people's money.

Freedom is loved by all, myself included
But freedom does not mean permissiveness, or the ability to do whatever you want, without regard for others. Believe me - you will not like it much if your neighbor will commit crimes under the slogan "I love freedom". No matter how much we talk about freedom, we always come to the point that there are still rules, which it is recommended to adhere to. Absolute freedom does not exist in a community, because it is regulated by laws and financial laws as well. The ultimate freedom is possible on a desert island, when you are alone there, but I'm sure it's not the freedom you dream of .
And about money "I think that people should do whatever they want with their money, without pressure and "stimulation"" - I don't insist that everyone should be an investor. It's everyone's choice - if you want to be, don't want to be, keep the stacks under your mattress. The question is, how effective is it?
Yes, in investing, developing your business, there will always be risks. And direct, indirect, and generally not expected... I, for example, could never think that my country will be subjected to a huge terrorist attack by a neighboring country. I have not suffered direct losses, but I know many people who have lost a lot, if not everything. But they are rebuilding businesses in other regions.
Those who kept money under their mattresses have lost all their savings.

In ordinary life, money "under the mattress" is not the most sensible use of savings. They "dry up", they do not benefit the economy, they create risks.

Therefore, as a supporter of freedoms and the right to choose - I do not insist on investments, I leave the right to choose to the owners of money, it is their money, and to dispose of it. And inflation - don't take my previous answer as "the government generates inflation so that everyone invests", you probably didn't quite understand me. I was just describing why this process can also be beneficial.
Inflation is a side process of social community and unstable world situation. When we find methods of solving these problems - then there may be no inflation:)
 

[FOKA33]

When the economy is constantly changing there must be an inflation. When prices tends to rise there must be an inflation, there are different factors that must leads to inflation such as  increase in the money supply, high cost of production etc.. thus the federal reserve is working to bring it down.

[DrBeer]

When the economy is constantly changing there must be an inflation. When prices tends to rise there must be an inflation, there are different factors that must leads to inflation such as  increase in the money supply, high cost of production etc.. thus the federal reserve is working to bring it down.

Prices, in a market economy can't just go up, you make a good point. Price change can be a consequence of inflation, but price change does not lead to inflation, on the contrary - inflation or deflation affects prices in the market. But it should be noted that not only inflation - market conditions, a sharp increase in demand or fall in supply of goods/services, various negative processes, such as natural disasters, wars, etc., are not the only factors. Inflation is a more complex process that affects all spheres of our life, including pricing.

[Uruhara]

The only reason why we have inflation, is because they keep printing money ... and there's no one to stop these damn politicians & bankers ...
It's pure theft.

Well, this is a factor in many countries experiencing inflation and even hyper inflation. Examples include Zimbabwe and Venezuela. And printing too much money will only create an unlimited supply of money on the market which will lead to a drastic decline in the value of a currency. In my country, hyper inflation has occurred in the past. But not because of printing too much money, but at that time it was caused by the uncontrolled circulation of 3 types of currency at once on the market. Luckily everything can be resolved and get better again.

[Peter90]

I invest in fixed supply investment instruments, I invest in Bitcoin and altcoins and I buy gold, but the history of the world has made progress with monetary expansion policies.

Hi trend



This chart shows how the purchasing power of the $ has changed - decreased - over time.
I could post similar charts for every country and currency in the world.



You say you invest in investment instruments, bitcoin... alt coins... gold...
Good for you trend, but do you know that there are billions of people in this world who do not invest in those things?
And not necessarily because they are lazy.
Maybe they are too poor, maybe they are unbanked or underbanked, maybe - like my neighbours - they are not enough financially sophisticated - would you force grandmas to read the Financial Times?.
Maybe they don't trust banks... the issuers of those financial instruments... financial advisors and the financial literature.
Maybe...


You are talking as if your situation - with your financial options - is the standard situation worldwide.
Do you know what does that destruction of money's purchasing power mean for people and families who are not in your - privileged - situation?

Read this post about unbanked and underbanked people in the USA.
This is USA.
I let you imagine other regions.
Unbanked and underbanked.
Hundred of millions of people and their families.

When I hear people talking about "progress with monetary expansion policies"... I wish they could - for a moment - lose their privileges and share the same condition of those billions of people who struggle protecting themselves from inflation.

[Peter90]

When I hear people talking about "progress with monetary expansion policies"... I wish they could - for a moment - lose their privileges and share the same condition of those billions of people who struggle protecting themselves from inflation...

... like these people in Argentina




This is inflation
People working... saving... their entire life... for nothing





"Inflation is necessary for economic development"

This is MSM propaganda
The fact that inflation goes with economic development doesn't mean that inflation is the cause of economic development.

Correlation isn't causation

Inflation is not necessary for economic progress.
For centuries there was economic progress without inflation: despite economic progress, that gold coin didn't lose purchasing power