Chapter 7 of 10All chapters
Chapter 7 of 10
Inflation
Causes, costs and cures.
Where it comes from
Too much demand chasing limited supply, higher input costs, or expectations becoming self-fulfilling as people price in future rises.
- Moderate predictable inflation is easier to live with than volatile inflation.
- Deflation is worse: people delay purchases and debts get heavier.
Who it hurts
It erodes savings and fixed incomes and lightens the burden on borrowers. That redistribution is why the politics of inflation are sharper than the economics.