The Bitcoin Journey
  • Why learn about Bitcoin?
    • Introduction
    • Table of contents
    • Changing nature of money
    • Role of money in protecting human rights
  • Trust problems with our money
    • Introduction
    • Banks: insolvencies, confiscation, and censorship
      • Gunman takes hostages at Beirut bank
      • Nigerian aid group finds sovereign lifeline in Bitcoin
      • Nigeria's central bank freezes accounts of police brutality protesters
      • Chinese depositors left in dark as three local banks freeze deposits
      • Freezing of bank account to shut down pro-democracy outlet
      • Hong Kong bank account freezes rekindle asset safety fears
      • Belarus tells banks to seize money raised to help out protesters
      • Banks have started to freeze accounts linked to Ottawa protests
      • Whose bank accounts can be frozen through the Emergencies Act?
      • Kremlin critic Navalny's bank accounts frozen
      • Long lines at Myanmar banks after coup
      • The Cyprus banking crisis and its aftermath
      • Bailout blackmail claims Cyprus president
      • Afghan central bank says U.S. plan for frozen funds an 'injustice'
      • Afghanistan sanctions from a first-person view
    • Central banks: money supply and currency debasement
      • Inflation by Wikipedia
      • Monetary inflation across the world
      • Inflation affecting Argentinian citizens
      • Inflation affecting Turkish citizens
      • Egypt devaluates currency by 48%
      • Bitcoin has saved my family
      • Problems with the CFA
      • Role of money in protecting human rights
      • Hanke's inflation rates
      • Milton Friedman on inflation
      • Inflating away sovereign debt in developed countries
      • How inflation is disproportionally affecting the poor
      • Financialization of an economy
    • A note on CBDCs
      • Impact of CBDCs different across the world
  • So, why do we need banks?
    • Introduction
    • Hard money and gold
      • Money and hardness
      • Gold as the hardest money (p1)
      • Gold as the hardest money (pt2)
      • Hard money survives
    • Problems with gold and resulting centralization
      • On centralization of gold
      • Layered money speeding up commerce
      • Global gold standard
      • The order of technology leading to centralization
      • Nations inflating their debt away
    • Abandoning hard money
      • Abandoning the gold standard
      • Abandoning the gold standard (pt2)
      • Breaking the gold standard completely in 1971 pt1
      • Breaking the gold standard completely in 1971 pt2
      • WTF happened in 1971?!
    • Digital money and eCommerce
    • Summary by Lyn Alden
  • What if?
    • Hayek on money the government can't stop
    • The first email
    • The first post
    • The Bitcoin whitepaper
  • How does Bitcoin work?
    • Introduction
    • Computers, code, and a ledger
      • Role of nodes
      • Full nodes
    • Mining and proof-of-work
      • Reaching decentralized consensus
      • Reaching decentralized consensus (pt2)
      • Dealing with conflicts
    • Where do bitcoins come from?
      • Bitcoin's money supply
      • Difficulty adjustment
    • The superpowers of a Bitcoin user
      • Public addresses and private keys
      • Signing transactions
      • Wallets and mnemonic phases
  • What is Bitcoin?
    • Outro
  • Getting started with Bitcoin
    • Using Bitcoin
      • Obtaining bitcoin
      • Storing bitcoin
      • Paying with bitcoin
    • Working for Bitcoin
    • Learning more about Bitcoin
  • Contribute
  • Support me
Powered by GitBook
On this page
  1. Trust problems with our money
  2. Central banks: money supply and currency debasement

Inflation by Wikipedia

PreviousCentral banks: money supply and currency debasementNextMonetary inflation across the world

Last updated 2 years ago

Creator
Time
URL

Wikipedia

1min

This is an excerpt from Inflation by Wikipedia.

In economics, inflation is a general increase in the prices of goods and services in an economy.[3] When the general price level rises, each unit of currency buys fewer goods and services; consequently, inflation corresponds to a reduction in the purchasing power of money.[4][5] The opposite of inflation is deflation, a sustained decrease in the general price level of goods and services. The common measure of inflation is the inflation rate, the annualized percentage change in a general price index.[6] As prices do not all increase at the same rate, the consumer price index (CPI) is often used for this purpose. The employment cost index is also used for wages in the United States.

Most economists agree that high levels of inflation as well as hyperinflation—which have severely disruptive effects on the real economy—are caused by persistent excessive growth in the money supply.[7][8] Views on low to moderate rates of inflation are more varied. Low or moderate inflation may be attributed to fluctuations in real demand for goods and services, or changes in available supplies such as during scarcities.[9] Moderate inflation affects economies in both positive and negative ways. The negative effects would include an increase in the opportunity cost of holding money, uncertainty over future inflation which may discourage investment and savings, and if inflation were rapid enough, shortages of goods as consumers begin hoarding out of concern that prices will increase in the future. Positive effects include reducing unemployment due to nominal wage rigidity,[10] allowing the central bank greater freedom in carrying out monetary policy, encouraging loans and investment instead of money hoarding, and avoiding the inefficiencies associated with deflation.

Today, most economists favour a low and steady rate of inflation.[11] Low (as opposed to zero or negative) inflation reduces the severity of economic recessions by enabling the labor market to adjust more quickly in a downturn, and reduces the risk that a liquidity trap prevents monetary policy from stabilising the economy, while avoiding the costs associated with high inflation.[12] The task of keeping the rate of inflation low and stable is usually given to monetary authorities. Generally, these monetary authorities are the central banks that control monetary policy through the setting of interest rates, by carrying out open market operations and (more rarely) changing commercial bank reserve requirements.[13]

Full source