Economics article - Inflation

Mark McIlroy
August 2021



1. There are only three ways that a government can raise the income that it needs to operate:

	a) Print money

	b) Collect money in taxes

	c) Borrow money


2. It is my suggestion that high levels of inflation are due to governments relying on printing money (budget deficits) instead of collecting money in taxes.


3. High levels of inflation can, if this is accurate, be fought by governments increasing the tax intake. and reducing the other means of raising income.



[Completed work, along with an earlier article suggesting that:

	1. Inflation at the large scale and over the long term is due to changes in the volume of money compared to changes in the volume of goods.

	2. Only the currency issuer can create money, banks cannot any more than any other commercial business could create money.

	3. Measuring the volume of money is difficult however the measurement of money created in a period can be done exactly, according to the record of RBA activities.


					Volume of money
	Average cost of an item = -------------------------
					Volume of goods



			Change in the volume of money
	Inflation = -----------------------------------
			Change in the volume of goods

]