Why inflation happen?

United States
December 14, 2011 8:20pm CST
Why we have to face inflation every year, and actually inflation is a good phenomenon or a bad phenomenon of an economic system? I remember that I had read an article about economy, when a growing, and healthy economy, inflation rate should be 2% to 3% each year. It also meant that our money will be worthless, and the price will be higher and higher. To be honest, why inflation existed within our economic system? Why that our money becomes less worthy? I remember 10 years ago, our gas price was 78 cents per gallon; now, it will be $3.20 per gallon on current market price. Anyone knew?
3 responses
@megamatt (14327)
• United States
15 Dec 11
I thought about this and often times, I think that the government is trying to recoup the losses that they made due to their reckless spending over the years. Or perhaps they are just greedy. Or perhaps it is just to keep certain items in the hands of certain people. Or it is just because, well sometimes inflation just occurs for reasons that we might not guess. It is getting to the point where I think that everything that we know about the economy is being called into question. The rules of the game, they can't have changed too much, could they? However, I think that it can, however the situation with gas prices does tell me that the supply is running dry and more people are driving to places where they should be walking. There is something strange going on that we're not being told, at least that's the thought I have.
• Indonesia
15 Dec 11
In my opinion, inflation caused by the goods because demand is not matched with your inventory. Decline in the value of the rupiah currency due to an increasingly limited supply of goods. Foreign debt will also be one factor that could lead to inflation. At the time the government pays the debt, the government pays to the value of the rupiah which would suck all the wealth of nations in a certain period. All asset value will be mortgaged by the state government to pay the national debt, so inevitably the state should explore other assets that are still embedded in earth to meet the state coffers that have been sold.
@voracious (624)
• Philippines
15 Dec 11
Consider the population, demand, and supply. As we know that population every year increases as well as the vehicle manufactured increases so as we know that OIL is not a renewable resources what happened is that the oil consumption increases while the oil source is slowly depleting, the tendency is the price will go up even if there's a rollback still that's not enough. As you remember 10 years ago the consumption that time is not as high as today.