The Truth About the Current Inflation
What is Inflation? → What is Causing the Current Inflation? → Final Thoughts
What is Inflation?
In a market economy, the prices of goods and services can always change. Some products become more expensive, others cheaper. If the prices of goods and services rise in general (average price increase) and not just the prices of individual products, we talk about inflation. When calculating the average price increase, the prices of products on which the average person spends more money (e.g. electricity) are weighted more heavily than the prices of products on which we spend less money (e.g. sugar or postage stamps). In short, when inflation rises, currencies lose value.
What is Causing the Current Inflation?
Supply and Demand
In a free market economy, prices are mainly determined by supply and demand (Law of Supply and Demand). In other words, the price is set at the point where buyer and seller agree on a price.
That means when demand exceeds supply, prices go up. This is exactly the situation we have again and again during the Corona…
