> In order to have a general price increase, there must be more money in the economy to sustain it.
I would describe this as “categorically incorrect”.
The law of supply and demand normally has two sides—supply, and demand. It’s simplistic way of looking at it, but it’s enough to explain why prices of a product can increase even if there isn’t more money.
If you focus narrowly on the supply on money, like it’s the only variable, you won’t end up with a satisfactory explanation of inflation. It’s like trying to understand the world by looking through a peephole.
Measuring US GDP in dollars is like measuring a shrinking table with a ruler that shrinks even faster each time you use it.
Simply doubling the money supply will miraculously double GDP figures because you're measuring GDP in terms of something you just halved in value (with disastrous results on the real economy)
I would describe this as “categorically incorrect”.
The law of supply and demand normally has two sides—supply, and demand. It’s simplistic way of looking at it, but it’s enough to explain why prices of a product can increase even if there isn’t more money.
If you focus narrowly on the supply on money, like it’s the only variable, you won’t end up with a satisfactory explanation of inflation. It’s like trying to understand the world by looking through a peephole.