What is Inflation? There are multiple definitions. I tend to like inflation is in an increase in demand, and there are scarce resources. Typically occurs when people living’s standard has been increasing. Having supply and demand as the base, this seems like the best definition. Some also define it as the currency losing purchasing power.
Inflation is the reason; you can’t just give everyone money and expect everyone to buy whatever they want in today’s world. We have a limited amount of things. There aren’t unlimited beachfront property mansions. Deflation occurs when demand goes down and supply outways demand. We have seen more deflationary pressures in areas like entertainment, tech, retail. There are more inflationary pressures in areas like healthcare, housing, and college education.
When the fed is targeting inflation, they are using a metric to devalue our currency. The fed are basing it on increasing the demand of the population. The idea works, as long as there are things to buy with it. The money supply will increase as the population increases because there will be more transactions and credit.
Is the fed trying to force growth by increasing the money supply and artificially growing demand?
Inflation is a complicated subject, with many factors. Please see below some resources I have liked: