Where Does Inflation Come From?

Mainly inflation comes from excess money supply growth. There is too much money in the system chasing too few goods and services.

Over the long term, Nominal GDP = Money Supply x Velocity of Money = Inflation + Real Economic Growth

“Inflation is always and everywhere a monetary phenomenon.” –Milton Friedman.

You may also like “How to Get Inflation?” & “U.S. Core Inflation Expected Over the Next 21 Months.”

Image: Hedgeye Risk Management LLC

Where Does Inflation Come From?