Post
Topic
Board Economics
Re: How does inflation start
by
BitOnyx
on 05/03/2014, 14:35:40 UTC
How inflation starts ? First inflation of gold was when silver was brought from new world. It not only created starvation in few trade towns, it also destroyed Ottoman empire. At modern times inflation is mostly created by banks, every time when you make use not only bank account but also it is easier to notice when we use cheque. When you give this cheque as a payment to one person, cheque for 100$, you still have this money on your account until this person go to bank with this cheque and this person have this cheque for 100$ in her/his hand. So you both have 100$ dollars (total 200$) made of only one part of 100$. This person can even pay with the same cheque to any one who would accept it.

And this way we have 100% inflation on 100$ until that person monetize this cheque.

Banks makes even bigger mess, making a lot of transactions with no real money.