A system associated with the production, use, and management of resources.
The main assumption here is that resources are finite, there are only so many laborers who can work, open land for construction, and raw materials we can use to build. Money exists to manage the production and distribution of resources
Economists and policy makers have been worried recently due to slow growth, and we’re expecting to run into a moderate economic slow down, but thankfully not a complete recession. Various environmental and sociological factors can have economic impacts, during COVID the US lost 20 million jobs, however there have been no long term impacts.
Consumer anxiety and the perceived health of the middle class will be major talking points for the 2024 presidential election, and extended periods of slow growth and the Russian invasion on Ukraine are also having ripples on a global scale.
On a simple level, inflation is defined as demand for goods at a given price level rising faster than the supply of goods, however I prefer to think of it in terms of “pools”
Money is basically just an IOU instead of doing direct trades of labor for resources, or resources for goods.
(labor, materials, land, water, time, etc)
When more money is available, it’s all worth less for the same amount of resources, and when more resources are available, money is worth more. Employment represents the labor resources available, which is why unemployment decreases economic activity (and creates recession feedback loops, where money is worth less because of less labor, and less labor forces businesses to raise prices, deflating the practical value of the dollar)
Same money 💵💵💵
Too much money 💵💵💵💵💵
Few resources 🌲
Same resources 🌲🌲🌲
This is also relative to how much people are willing to spend, and how much companies are willing to sell the product for.y
When inflation goes up, workers need more money to get the same number of resources, meaning businesses need to pay more and therefore they need to charge more resulting in hyper inflation.