So Investopedia says inflation is "the decline of purchasing power over time":<p><a href="https://www.investopedia.com/terms/i/inflation.asp" rel="nofollow">https://www.investopedia.com/terms/i/inflation.asp</a><p>Now what could cause that, I wonder . . .<p>(Note: It's not in any way cynical for profit-seeking companies to seek profits. So they un-cynically behave just like profit-seeking companies.)
Inflation is caused by increases in the money supply or decreases in the amount of stuff you can buy with those little pieces of paper.<p>Printing more little squares of paper, or adding numbers to a bank account, does not, and cannot, make more goods or services available for purchase.<p>If you hold your prices the same, foolishly, all that happens is that people buy out your stock and you can't afford the cost to produce more goods, either in wages or raw materials or anything else.<p>You have to help enable more productivity in order to get more stuff to buy. When businesses are shut down, even justifiably as they were with Covid, less stuff gets done, fewer raw materials are produced, etc.<p>> In other words, during a period in which consumer demand largely cratered because people were staying home, businesses jacked up prices so far and so fast that they more than compensated for the decline in overall sales.<p>And all costs were higher because nobody is producing stuff due to lots of shutdowns, shipping was disrupted so goods were simply not available, etc.<p>This isn't even hard to understand, but articles like this exist because people want to allocate blame instead of looking at how to do better.
Just an observation.<p>Inflation became significant in EU (namely Sweden) in early 2019 (one year before covid crisis). Transport rose 15% first days after Christmas, coffee 20%, tea 15%, fuel around 5-7%, etc.<p>Covid logistic crisis did not make much difference for prices until some ship got stuck. Then immediately all main newspapers wrote that, due to that ship, people must brace for the prices going up. And they did go up!<p>How was it in the US? Any significant change in prices one year before covid?
Capitalism has an answer for excess profits: competition.<p>It works exceedingly well, better than anything else humans have invented to handle unexpected shortages and global supply chain issues.<p>Governments should focus on ensuring that business environments are ripe for competition. Write laws that do not require large corporate legal teams to navigate. Thus far, we've failed on that front.