https://www.youtube.com/embed/zxwO4xw4CZ0
This video explains the how prominent economic theories explain the cause of Inflation
- Keynesian economics – supply/demand imbalances cause inflation (in previous example, it is the rice/fish supply increase/decrease)
- Monetarism – “Inflation is always and everywhere a monetary phenomenon”: Milton Friedman (in previous example, rice is money and monetary reasons cause inflation)
- New Keynesian economics – Just expecting “Forward Looking Inflation” causes behaviour change which then causes inflation as a self-fulfilling prophecy.
As mentioned in the video, the inflation readings of the past 15 years (no inflation despite a decade of printing money and sudden inflation in past 2 years) require the theories to be updated and possibly a new theory…
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