All posts in category Inflation

Are you worried about inflation? Don’t be

Last summer, the Fed switched to “average inflation targeting.” The Fed’s main goal is┬áto ensure that the PCE inflation will average around 2% over the long term and that future overshoots will compensate for any short-term discrepancies. Although a starting point is not specified, we can assume that January 2020 is the beginning. Therefore, according […]

Money Matters

Note: I originally designed this post as a separate post, but it changed as I continued to write. At one point, I realized that I needed to write the background for the first post of the “Back to Basics” post series, as even in this form there were points left behind that needed to be […]

Back to Basics, Pt. 4: The role of expectations

In the┬áprevious post, we examined the Quantity Theory of Money. We have seen that increases in money growth rate lead to high inflation leading to higher speed and lower real money demand. This indicates that when it comes to a rise in the money supply growth rate, in the long run, the price increase will […]

Back to Basics, Pt. 3: The Quantity Theory of Money

In the previous post, we entered the fiat money system. Now we will examine the quantity theory of money. The fiat currency’s supply and demand are different from the commodity money model(silver or gold) we examined earlier. There are two reasons for this: In the fiat money system, the government has unlimited control over the […]