As I understood inflation, it is an increase in the money supply(through the banks via loans) without corresponding increase in the supply and demand of goods and services(growth of economy) thus diluting the existing circulation of money and thus devaluation of the currency . . . . On 5/24/10, Ndungi Kyalo <ndungi@gmail.com> wrote:
While at this, would someone in the know be kind enough to explain inflation ? The last time someone tried to explain it to me it went well until he lost me at the point where `sh 100 today will be sh 50 next year`. Where does my sh 50 disappear to ?
On Mon, May 24, 2010 at 12:04 PM, Phares Kariuki <pkariuki@gmail.com> wrote:
On Mon, May 24, 2010 at 2:53 PM, Davis Waithaka <daviswaithaka@gmail.com>wrote:
A wise Kenyan writer said "...money is the side-effect of specialization.."
In that, in a specialized economy (where everyone is supposed to be very good at producing one thing but needs everything else from without) we need a 2-step process in every transaction. If you build houses but need bread you ask for money for your skill and give out the money for your bread. Long story short, your wealth is in your skill and not in your money ... your wealth is in what you make while money is just a mode of transfer of the said wealth to other 'wealths' ie the bread-maker's wealth is his bread(s).
Banks' wealth(s) are in the ability to ease this transfer and to leverage it. Their wealth is in this 'knowledge' and 'access'. If you look around with this concept of wealth vs money many of your questions might be answered.
Hope u r answered by my 2 cents (no pun intended :)
Davis
True, but this does not factor in need & choice. Need is the main reason we have disparities in income for similar skill sets. e.g. CCNA. 10 or so years ago, a job guarantee, today? Not quite... What changed? Demand for the same went down as supply increased.
-- With Regards,
Phares Kariuki
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