Episode 82: Don’t be fooled by political & financial double-speak. Prices rise & fall because of two independent factors- Supply/Demand and Inflation/Deflation.
Supply > Demand: prices fall [this can be caused by a number of factors: consumer apathy, over capacity of production, technological advances, etc]
Demand > Supply: prices increase [consumers are willing to pay more to get something that is scarce]
Increased Money Supply: prices increase because more money is available, this is INFLATION [money supply can be increased by Central Banks manipulating interest rates or “printing money”, easy mortgages loans, or loose credit cards]
Decreased Money Supply: prices decrease, this is DEFLATION [money supply is restricted, for example because of stricter lending policies or higher interest rates]
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