Ch. 10.

I had never completely understood inflation before. It was always a big word smart people used. Now I get to be a smart person! :) The way Wheelan  describes the steps, reasons and causes of inflation was fascinating to me, it totally explained the process in a way never heard before. "When demand exceeds supply, firms can charge more and still fill every boat or sell every computer." p. 221 If consumers demand more than the economy can produce, inflation happens because of higher prices. I understand this now. That's why money is "losing" it's value, and that's why we're paying higher prices for items that used to be so much "cheaper." As a sidenote, it was interesting to see how supply and demand from micro economics contributes to macroeconomics. If demand is greater than supply, it's bad. If supply is greater than demand, it's bad, even worse. There is a limit to how fast an economy can grow. We can't just sprout overnight like we can with our GDP numbers by adding a certain form of health care expense to the calculations. Economies have to balance and pace themselves.