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Tuesday, January 18, 2011

Inflation And Price Levels

Price increases in goods arising from an imbalance of supply and demand are not inflation.  Inflation is over-expansion of the money supply, resulting in the dollar’s declining purchasing power vis a vis the purchasing power of other currencies.  Focusing, as the Federal Reserve does, on its index of core inflation - various prices excluding food and fuel - fails to measure the extent of inflation.

Posted by Thomas E. Brewton on 01/18 at 01:23 AM
Economics • (6) Comments
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