inflation

[steveb]

why does inflation happen?

[stevie21]

The whole world feels hard done by and asks for a pay rise.
Their employers are thus making less profits so jack up their prices.
The employess (the whole world) can now buy less toys with their wages so ask for a pay rise.

Repeat lots and watch as prices go up (inflation).

[vehelpfulguy]

But that does not account for rampant inflation.

In Germany just before the second world war inflation was running at an alarming rate and people were paid daily so their money would not be worthless by the end of the week. How does that happen ? 

[metagirl]

isn't it when people spend too much, which in turn make the prices for things rise? Inflation is rising in the USA, possibly due to the low value of the dollar (which most Americans do not realise unless they travel outside the country - and most don't) and the Govt's insistence to its citizens to keep spending!

[stevie21]

There's also the laws of supply and demand. If people have tons of money are are dead keen to buy the new iPod then apple can afford to charge more for it. Prices are inflated because the demand can't be satisfied (see what happened there? "inflated" ) and the rate of inflation is higher.
The music itself, on the other hand, is freely (and illegally) available online so no-one can afford to charge �50 for a CD wen you can get it free elsewhere.

It's *obviously* not entirely as simple as this but in a nutshell, these are some very basic things that lead to inflation. My first post is maybe a basic outline of why inflation is persistent and we don't see a decade of prices shrinking.

[frenchkiss]

simply put it's to much money chasing to few goods

[marcusjames]

But the question is .... is inflation a good thing for the average individual ?