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The credit crisis of 2007 is a very good example of this at work.
- Inflation can artificially be created through a circular increase in wage earners demands and then the subsequent increase in producer costs which will drive up the prices of their goods and services. This will then translate back into higher prices for the wage earners or consumers...
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This will then translate back into higher prices for the wage earners or consumers. As demands go higher from each side, inflation will continue to rise.
Effects for Inflation
The effects of inflation can be brutal for the elderly who are looking to retire on a fixed income. The dollars that they expect to retire with will be worth less and less as time goes on and inflation goes higher...
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