inflation…I have read on wikipedia that exists two main ways of though. Which is the most accepted theory of inflation? Where i can find a deep description of the origin of this phenomenon?
I count about FIVE different sources of inflation.
1) Monetary inflation. The central bank prints too much money, which “chases too few goods.” Think of the German hyperinflation of the 1920s.
2) Fiscal inflation. The government spends more than it receives in taxes. That’s a “Keynesian” phenomenon worldwide.
3) Cost inflation. Usually the result of a “shock” in the price of some major commodity such as oil. Think of the OPEC oil shock of 1973.
4) Demand inflation. America’s late 1970s response to the 1973 oil shock. Workers write cost of living clauses into contracts in response to the oil shock, causing more inflation.
5) FX inflation. The local currency is sharply devalued. Think Mexico in late 1994.
Price inflation is caused when the money supply increases, all other things being equal.
If you want an in-depth discussion of money, the best book on the subject is:
The Theory of Money and Credit by Ludwig von Mises
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