Inflation - what is it, where did it come from, where is it going

"Money doesn't seem to go as far these days..." It is not the first time that has been said. Ever since the shave and a haircut cost 2 bits (25 cents) we have casually observed the impacts of inflation. The cause is the expansion of the money supply, which is the creation of money (printed or recorded in bank ledgers...all out of thin air). There are inrceasing numbers of dollars chasing static or decreasing amounts of goods and services.

The free market causes prices to increase until demand lessens. Government policy regarding climate change has also caused prices to increase. The infamous carbon tax has caused the price of gas/ carbon based fuels to increase substantially. This increase now surfaces in every single consumer good since fuel is an input to those things. Food inflation, for example reflects higher shipping costs, higher costs of fertilizer, cattle feed, farm labour and store operation. The classic measure of inflation is the dollar comparison with Gold.

Today...about $2500 cad per troy ounce. Back in 2013 it was $1300 cad. The price reflects the cost inputs to mine, mill, smelt, mint, transport and sell Gold. These rarely go down. Many believe that Gold is going much higher. Real estate, though subject to supply, has phenomenal correlation to the increasing costs of inputs. The rising cost of lumber, copper wire, plumbing, shingles, concrete, gravel, paint, appliances, windows and doors, steel fasteners. All the inputs are going up in price due to inflation. You may ask "where does it end?"

The surprising answer is that it never really ends so much as deflation hits... The collapse of the money supply...a time when no one may buy no matter how low the price because they have no money and can no longer borrow it. Consider when houses become so expensive people start living in tiny houses or even vans or cars...right, that is happening now.

Deflation happens when assets are destroyed as in time of war, or when people simply default on their loans...in some cases banks collapse ( right, that too is happening) It is the author's view that we are on the brink of collapse. Deflation is imminent and we will soon learn that certain assets will no longer be wanted at any price.