Topic: Inflation and Deflation of Price and Money Supply - page 28. (Read 1451175 times)

1) Increase in money supply >>>  2) Higher demand for goods and services >>> 3) Higher demand = price level increase in short term >>> 4) Price increase = Inflation

1) Increase in money supply >>>  2) Higher demand for goods and services >>> 3) Higher demand = price level increase in short term >>> 4) Price increase = Inflation

Let us keep it as understandable as possible. Inflation is the increase in value of your money in the future while deflation is the decrease in value of your money in the future. That is it. Say for example in inflation, if you have $1 now, you can buy 10 sodas. But immediately two years after, if you have $1, you can only buy 5 sodas with it. In deflation, if you have $1 now, you can buy 10 sodas. But immediately two years after, if you have $1, you can buy 20 sodas with it. Simply put, the value of your money today and in the coming years depends on how well the economy worldwide is doing.

Let us keep it as understandable as possible. Inflation is the increase in value of your money in the future while deflation is the decrease in value of your money in the future. That is it. Say for example in inflation, if you have $1 now, you can buy 10 sodas. But immediately two years after, if you have $1, you can only buy 5 sodas with it. In deflation, if you have $1 now, you can buy 10 sodas. But immediately two years after, if you have $1, you can buy 20 sodas with it. Simply put, the value of your money today and in the coming years depends on how well the economy worldwide is doing.

yes inflation and deflation of price and money supply is just always to happen every now and then..traders,investors are getting some ways to do to let there market still be on the top

You guys can't really believe it works like this, can you? Deflation over 2 years vs. inflation over 100 years is not even close to a fair comparison, to start. Secondly, deflation of this scale discourages an active economy (as we've already seen with BTC) and makes it worse, especially with a limited currency like BTC. People sit on their BTC and don't spend it because it's an investment. Third, cost of goods/services and salaries are (though sometimes poorly) adjusted for inflation. If you got paid $10/hr in 1929 you were doing really, really well. If you get paid $10 in 2017 you can barely make ends meet. Finally, you can't honestly believe that deflation will continue at the rate it has been with BTC forever.

Hello there,

Can we ralete the price and money supply of BTC to the political movement of US with other countries?

Inflation occurs when there is a sustained increase in the general price level. Traditionally high inflation rates are considered to be damaging to an economy. High inflation creates uncertainty and can wipe away the value of savings.
Advantages of Inflation

Deflation is potentially very damaging to the economy and can lead to lower consumer spending and lower growth. For example, when prices are falling, consumers are encouraged to delay purchasing.
A moderate inflation rate reduces the real value of debt. If there is deflation, the real value of debt increases leading to a squeeze on disposable incomes.
Moderate rates of inflation allows prices to adjust.
Moderate rates of inflation is sign of a healthy economy. With economic growth, we usually get a degree of inflation.
Disadvantages of Inflation

High inflation rates tend to cause uncertainty and confusion leading to less investment. It is argued that countries with persistently higher inflation, tend to have lower rates of investment and economic growth.
Higher inflation leads to lower international competitiveness.
Menu costs. – Costs of changing price lists.
Inflation and stagnant wage growth leads to declining incomes.
Inflation can reduce the real value of savings, which might particularly affect old people who live on savings. However, it does depend on whether interest rates are higher than the inflation rate.
While deflation
Low prices for all
This means that low income earners will be able to afford essential items, so they'll be escaping the poverty bracket.
Also, because prices are low, workers may behave rationally and accept wage cuts, decreasing the costs of production for UK firms.
Thats all I can think of from the top of my head.

Greetings everyone,

...little confession here, I think I may be a Keynesian ...

Government economies have various tools to stimulate or cool down the economy. Bitcoin has none of this and it will go wherever people and their emotions take it. It's a scary thought.