Quote:
Originally Posted by darcane
Take a look at commodity prices. Since last summer, they have been on a tear. In 6 months, corn and cotton up 75%, wheat, barley, and others up 50-60%. Oh, and of course oil...
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But is this because of inflation - a change in the value of the currency - or is it because of supply & demand: e.g. food prices going up because of the Russian crop failure, other commodities rising because of increased demand from China/India, etc?
Try a little thought exercise: you live on a remote island, which uses actual gold & silver coins for money. You've been used to paying say an ounce of gold a month for your food, but this year the rains didn't come, the crops failed, and all of a sudden you need to pay three or four ounces for the same amount of food. Is this inflation? How can it be, when you're on a gold standard?