Quote:
Originally Posted by NoDrama
Check out this link, Its going to explain inflation in terms just about anyone can understand, pay particular attention to the example on the island. It explains clearly why things like production costs, labor costs, raw materials, exchange rates, taxes, reduction in supply and increase in aggregate demand DO NOT CAUSE price inflation
http://www.silverbearcafe.com/privat...inflation.html |
I read your article. Why he chose a perishable item (fish) for money has me scratching my head. Now it is time for you to do some work.
Explain what happens when a woman washes ashore of my island and Menard and I have kids with her, and they have kids and so on. Before you know it there are 100,000 of "us" on the island (the womans family is know for multiple births).
Do they produce or do Menard and I do all of the work with our same output as we had when it was just the two of us? Do we increase the money supply (fish) as the population increases? If the money supply is expanded at the EXACT same rate as population growth is there inflation?
