In the last post I talked about inflation and how it represents a generalized rise in prices and a permanent decrease in purchasing power. I know I mostly focused back then on inflation caused by the growth of the money supply, but inflation actually has a lot of possible mechanisms. In this post I’m trying to go through all of them and explain them. As a basic rule, inflation caused by printing money is not the main cause of inflation. Naturally, inflation appears when there

In one of the past posts I said we’d address the problem of inflation. Somehow, every time we looked for solutions to different problems, we kept running into the problem of money. We said we can’t grow incomes fast enough, because productivity can’t be grown fast enough either. So how do we address the money problem? Well, another way to visualize the situation is to imagine a big bucket of water, and inflation is a small hole in that bucket. Normally the hole is just big en

Hi there, my loves, how are you doing? I hope this post finds you well in the future. I'm curious what age you'll be when you read it. Today I want to talk to you about money. And no, this isn't a conversation about how much money we're leaving you as inheritance, but about the very notion of money. You see, your mother and I were born in Romania, to parents who were never encouraged to understand the world around them. In a communist state, that was simply normal. I don't th