Inflation, a monetary phenomenon
The link between the quantity of money per unit of output on the one hand, and inflation on the other, has been observed for centuries, in all geographies. It is a well-documented phenomenon, discussed by the greatest minds in economics and mathematics. As I can’t claim to even come close to his eloquence I can only advise to anyone wanting to understand inflation and its cause to watch this amazing speech by Professor Milton Friedman, 1976 Nobel prize laureate for his work monetary history and theory: https://youtu.be/B_nGEj8wIP0
Applied to today
Updating Professor Friedman’s graphs to today for the United States would give the following :
The graph above suggests that the equilibrium price level (CPI) for the current amount of money in circulative relative to output lies around 350. With CPI currently standing at 295, this indicates that prices in the U.S. should increase another 20% before inflationary pressures disappear, assuming the money supply remains stable.
