Inflation: Too much money chasing too few goods? – Hardly!

October 2, 2009

That more money is available than goods is a nearly axiomatic definition of inflation in economic texts, media, and politics. But empirical data from direct observation indicates it is not true in the current economic environment.

One can find many retail businesses offering discounts, and failing businesses; while advertising is a multi-billion dollar enterprise. One can easily find retail stores full of merchandise for sale. This is direct evidence that there is not enough money to liquidate what is available for sale. Yet, prices keep going up. Therefore, it cannot be too much money for consumption causing price increases.

Consumer debt is about $2.5 trillions for consumer goods that have been “sold” but have not yet been paid for; and, still, retail stores are full of merchandise. Advertising of sales discounts is constant along with easy credit.

Inflation is often expressed as rising prices, but many things such as scarcity, seasons, fads, war, and weather affect prices along with the phenomenon of inflation.

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