I've been watching it.. wonder how high it will go
The government prints money out of thin air.
So the value of the dollar goes down because there are more of them
People think inflation is some mystery
It happens because the government printing money and making it worth less.
I'm no economist, but the classic definition they use for inflation is not what you said. The classic view is that consumers have lots of money to spend, but goods are in short supply in the marketplace. That drives prices up because sellers know it will be that much harder to order new stock. People with a little more to spend than the next guy end up getting the products and the rest of us get nothing.
As an example, the pandemic hit hard in late 2020 - spring 2021, and a couple of things happened. In the US, 15 million people lost jobs entirely, or worked reduced hours remotely because we were all isolating at home. Also, we were all sent pandemic cash handouts from the government to stimulate the economy and we all had cash in hand to spend. However, we stopped spending money on going out, and started buying things to make our homes nicer instead. Theaters, concerts, nightclubs, restaurants all took financial hits, but sites like Amazon, Wayfair, et. al. , and brick and mortar shops, all did better business selling home goods that were in higher demand.
The other thing that happened in 2020 was that China's exports tanked. Their people also were sick. They lacked manufacturing workers, and truckers and shippers to get the goods to the ports. On our end, we lacked truckers and shippers and especially longshoremen (remember huge port delays everywhere?) So: lots of money to spend, but nothing on the shelves to buy. For a year or so, prices rose, and inflation spiked. It was a perfect example of that classic economics inflation scenario I described above: too much money chasing too few goods. Now, it's been dropping for a year and a half and US dollar inflation is now back down to one of he lowest points since we've been tracking inflation. Food prices are higher than they should be due to structural issues in our food distribution system, not in any intrinsic increase in the value of the food. Big Ag is getting rich and sticking to the rest of us.
I don't think inflation happens because the government prints unbacked money. We went off the gold standard in 1935 and people have been predicting "the crash of the American economy" ever since. It hasn't happened because our money supply is well-managed by the Fed. I don't think many Americans understand monetary policy the way the Fed does. And the Fed does a decent job, so their view must be a close enough match to the reality on the ground.
Example, throughout my life, every episode of inflation in the US (several) has been brought to an end by the Fed managing interest rates, only to slide straight into a recession (defined as: too many goods, but too little cash money to buy them.) This time, the Fed and Jerome Powell have pulled off a unicorn: the long sought-after "soft landing." That is, ending inflation
without generating a rebound recession.
Until this year, that has
never happened in my life.
Don't mistrust money just because the government sets the
buying power of its currency. It would be chaos if it didn't. Governments have done so for centuries, even when precious metals were still in circulation, and we are much better at it today than anytime in the past.
Nor does it need to be "backed" with anything but the full faith and credit of the USA. I am currently burning through my 7th decade and I've been hearing this criticism that money "has to be backed with something"
all my life, followed usually by dire predictions that we're heading for a catastrophic meltdown. The government/country/economy hasn't blown up yet.
Oh, yeah. When we bought our first house in 1987 our mortgage rate (major bank lender, 30-yr Fixed) was 14.5%. A consequence of fighting the Vietnam War on credit instead of raising taxes. (Thanks, Congress!). Now Gen. X snowflakes are whining if they have to pay more than 5%. can we all just get some perspective, here?
Just my view...
