That's a widely popular fact. And yet there doesn't seem to be any correlation between growth and any positive amount of inflation. (There is a lot of correlation for negative inflation.)
Even the idea that "inflation" is something simple to define and measure is wrong.
I am not an economist, I do not even play one on TV. So forgive me if I sound naive.
That said, it seems intuitive that inflation and growth would be linked. Inflation means that there is more demand than supply, right? In response to that increased demand supply (and the number of jobs) are increased by profit seekers, which creates growth.
I am no economist either.
As I understand inflation is the reduction in purchasing power towards a basket of household goods and services.
So it’s not only ask and demand but many other factors like energy price rising and all the things that get into the cost of a product or service.
Inflation in the sense of growth is the more money it needs to have a transit of the value of goods the more goods are produced of value and sold so the net revenue for credits should be positiv and that over time is growth. Or otherwise said we have more stuff at the end of the day … jehaa
Edit:// the credit by the bank is the money supply in that case.
You are missing complexity. That model is naive, and the world doesn't really work that way.
But then, AFAIK nobody has a good model that actually explains what we see.
Anyway:
> Inflation means that there is more demand than supply, right?
Even in principle, balancing supply and demand is a task of price ratios. And most definitions of inflation make it something that doesn't reflect price ratios at all. Instead, it's usually about absolute prices.
