What goes up, must come down. The law of supply and demand stipulates, when the demand for a particular good or service increases, that the available supply decreases. When fewer items are available, consumers are willing to pay more to obtain what they want. These higher prices are due to the supply not being able to meet the growing demand, so prices for goods and services are marked up higher. Inflation is caused by the supply of money going up, the supply of goods going down, demand for money going down and demand for goods going up. Right now, the job market is good and gas prices have come down, so maybe there is light at the end of the tunnel.

Mindlovemisery's Menagerie

When people hear the word inflation, they think about how much more they will have to pay for gasoline, groceries, and other necessities.  Inflation is discussed a lot, but the causes of inflation are extremely complex, so it is not understood very well.  Most normal people do not understand how inflation works, but the concept is simply when consumers demand goods, possibly because of the larger money supply, at a rate faster than production.  The money supply is complex as it is a measure of the total amount of coins, bills, and other liquid (easy to spend) currency that exists within an economy.  The Covid pandemic put the US economy in a recession when businesses were shut down and people were kept at home due to fear of the virus spreading and this resulted in huge job losses in early 2020.  The U.S. government countered this by flooding the American economy with…

View original post 978 more words