Comment Inflation is about money (Score 1, Interesting) 135
[...] and high inflation for basic products is driven by population growth. This is basic supply and demand logic.
Supply and demand is one reason why prices of goods can rise, but that explanation comes with conditions.
To draw a math analogy, you can use linear regression to find the optimal slope and intercept of a line that best explains the data, but that only works when the underlying mechanism giving the data is itself linear. You should only use that method and that explanation if the original condition (the underlying mechanism is linear) is met.
Supply and demand is conditioned on there being only one product under consideration in a sea of available products. It's 'sorta like doing thermodynamic calculations by taking a source sample from a very large isothermal bath - so large, that taking the sample makes negligible changes in the bath that can be ignored.
When *all* products rise or fall together, the conditions for supply and demand no longer apply. Another way to look at is is to note that food prices have gone up even though there is plenty of food available, the population/demand for food hasn't changed appreciably, and the source amount of food hasn't changed appreciably.
Under those conditions, rising prices are due to monetary policy. If there is a constant output of product, more money is injected into the system will "dilute" the value of money relative to the product. 'Sorts like adding water to chicken soup. It makes the soup thinner, there is more water per noodle than there was before you added extra water.
That's the fundamental cause of all the inflation we've been having. It's not supply-and-demand, the conditions for that explanation are not met.
Inflation is caused by excess money in the system, nothing more.