Hacker Newsnew | past | comments | ask | show | jobs | submitlogin

> ...caused by actual supply constraints

Just curious, how would supply constraints lead to inflation? I'd expect lower supply would cause deflation



Inflation refers to dollars buying less hamburgers.

When there's a supply constraint - not enough hamburgers to go around - the price of hamburgers goes up and as such there is inflation.


Ah, I misunderstood the parent comment to be referring to _money_ supply. Whoops!


Prices are set by supply and demand.

Inflation refers to the price of goods increasing.

If supply reduces and/or demand increases, all else equal, prices increase. If supply increases and/or demand decreases, all else equal, prices decrease.




Guidelines | FAQ | Lists | API | Security | Legal | Apply to YC | Contact

Search: