Ask HN: What Would Solve Inflation?
I am curious to know in your mind, what would solve inflation?
Would it be something like unlimited free energy or something else?
Would it be something like unlimited free energy or something else?
Inflation used to be defined as an increase in the money supply: this can be easily explained when you realize that for the longest time in human history, "making money" had a real cost [2]. After all, the material that a coin was made of was gold, silver or copper (for small amounts), that first had to be mined. If there had been no recent wars and therefor the supply of slaves was low, then new coinage was hard to make because labor for the mines was hard to come by.
Food prices would rise in times of drought, but would come back down afterwards [3]. So for a very long time, prices were more-or-less constant [4].
The 'simple' solution to go back to a "pre-inflation" world is to take the privilege of money-making out of the hands of governments [5] and leave it up to a natural restricted good that is in high demand and (constant) low supply, like, gold. There is, of course, no direct way today to do this, but as of now, nobody is stopping you from buying hard assets like gold or bitcoin, and using them to pay with.
[1] https://www.lynalden.com/inflation/
[2] https://www.britishmuseum.org/explore/themes/money/the_origi...
[3] This effect is gone in today's "inflation".
[4] https://www.nber.org/system/files/chapters/c6739/c6739.pdf
1. Energy costs 2. Labor Costs 3. Artificial supply limiting(Intellectual property, property rights, licensing, taxes etc.) 4. Natural Resources costs - Recovery (Either Mining or recycling)
Increases in demand: 1. Wages 2. Government(Federal, State Local) 3. Charity 4. Exports
The current process is to cut interest rates which forces cuts and commissions in financial institutions and changes entrepreneurial and investor behavior from investment to wealth preservation. which leads to cutbacks in spending, wage reduction, and layoffs which leads to less demand in common goods once it reaches the middle class and poor which spend most of their money on those types of items.
which also leads to cuts in production as is the case in the current oil production
Another way to reduce the money supply is to increase taxes but that's mostly impossible to accomplish so we'll see interest rates rise until we see inflation slow.