The most common form of inflation is due to an increasing money supply, but it (as demonstrated with Bitcoin) can have other causes.
Not really. The money supply only affects inflation in that it increases demand for some things quicker than supply can meet demand. In that regard, untargeted stimulus money did that. Let's not forget though that there is also significant supply disruptions with covid, the war in Ukraine... There's also strong supply-side factors to the inflation we're experiencing.
My Econ 101 understanding is that if there is more money available to buyers but the amount of goods available stays the same, and if the goods have elastic prices, the prices will go up.
Money doesn’t even get introduced until later.
A better way to have phrased my post is that economics fundamentally understands price levels as being driven by supply and demand, and everything else influences prices though effects on supply and demand.
(eg : bad weather impacting crops production resulting in increased food prices for a year, or a war imposing blockades on oil and gaz)
No, that's just an increase in the price of bread. If all the inputs in making the bread were in BTC, then it would be inflation.
If all of the inputs that went into making that bread were paid for in USD, and the relative price in BTC went up, that's called "currency risk". That's a completely different thing from inflation.
Also, any currency devaluing (which BTC is doing) is inflationary for an economy based in that currency.
And the purpose of a currency is to facilitate financial transactions.
Which crypto is horrible at, because it cannot maintain a decent value at any point.
Crypto is as good at being currency as iron is at being bread.
'In economics, inflation is a general increase in the prices of goods and services in an economy. 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.'
I can afford less for the same unit of currency (Bitcoin) therefore I have inflation or deflation if I get more.
And people claim that Bitcoin is inflation save due to a limit amount of bitcoins being produced (I read that multiple times) while this is just not true.
It is correct that bitcoin is designed with limited supply in mind, but that does not necesaarily stop inflation and definitely doesn't in practice because currency risk dominates the perceived value of bitcoin.
As far as i remember, people often claimed that bitcoin protects against inflation, that statement has so many requirements attached so it doesn't matter in practice.
Which means earlier you invest more your Bitcoin is worth.
Until someone realizes that who ever was rich before is now loosing valur by investing in BTC too late and making early adopters rich.
The question is only when this ruse gets so outbalanced that no one wants to invest anymore which will either lead to inflation or the big crypto burn.
> Definition of inflation: a general increase in prices and fall in the purchasing value of money.
It feels like you are jumping through hoops to avoid the definition of inflation.
The parent comment's mention of bread is literal and figurative. When talking about inflation, "bread" a whole sector of goods. The specific mention of bread is to reference necessity - basic needs like food/shelter/clothing.
Clearly the lines of inflation are fuzzy but if 'large enough' people's basic buying power decreases then you have inflation.
With BTC, the parent comment is simply talking about being able to buy less with BTC because they can't go to someone who will give it to them for a lower price. Do that with enough goods and you've got inflation?
But I think parent commenter is correct. The bread price increases because of inflation of the USD denominated inputs. What you can buy with BTC changes because of changes in currency swap prices. In Zimbabwe during hyperinflation a dollar would buy you the same amount of e.g. bread because the goods inputs were priced in USD, but it would cost vastly more in Zimbabwe dollars on a day to day basis.
It's a measure of the increase of prices compared to currency value. Currency supply change can be one of the forces which affect it, but it's far from the whole picture.
Sure, it may or may not fit the classical definition of inflation, but if it happens across the board, then functionally it is the same.