What is inflation?
Inflation is one of the most commonly misunderstood phenomenon in the world today – even by so called professionals. I worked in the investment banking industry for fifteen years. I would bet the percentage of these people who really understand inflation is in the low single digits. This is by design.
For the same reasons the central planners hide half of the price equation from us they are misinforming us as to the true definition of inflation. Truth is kryptonite to the empire of lies. The misinformation is perpetuated by the education we receive in government funded institutions of education and by the mainstream media. To learn the truth we must first expose these false truths with which we have been indoctrinated.
We have been taught in school, by government experts and by the media that inflation is rising prices. Is this true? Let’s find out together.
We learned in the above section on prices there are four variables simultaneously effecting the price of things we buy. Furthermore, we learned there are only four possible scenarios where changes in these variables will result in rising prices. Let us take each of those four scenarios one at a time in isolation and logically analyze how each will effect the overall level of prices in an economy.
