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<p>[QUOTE=&quot;Cloudsweeper99, post: 964553, member: 3011&quot;]In your example, the increase in gas prices is NOT inflationary.&nbsp; The effect is NOT the same.&nbsp; There are always price increases and decreases in a free market as supply and demand adjust.&nbsp; If there is a disruption in the supply of something, the price rises.&nbsp; If demand for beanie babies goes through the roof, the price rises.&nbsp; This has nothing to do with inflation and deflation.&nbsp; In the 1970s, the Arabs embargoed shipments of oil to the US and the price rose.&nbsp; This, by itself, is not inflationary.&nbsp; It depends completely on the monetary policy decision regarding how to react to it.&nbsp; In the 1970s, the government decided to monetize the price increase and the inflation rate went up.&nbsp; If they decided not to monetize it, the price of other goods and services would have to fall.&nbsp; But overall prices would have remained the same.</p><p><br /></p><p>Understanding inflation isn&#039;t simple because Americans typically are not precise in the use of language, and as Keynes pointed out, &quot;not one man in a million will figure it out.&quot; [slightly paraphrased]&nbsp; But it is important to understand that changes in prices do not represent inflation or deflation.</p><p><br /></p><p>Anyway, that&#039;s all I&#039;ll have to say about this because it can become repetitious, and you can have the last word.&nbsp; Some people will get it, some won&#039;t.&nbsp; I just wanted to put the correct answer out there in the hope of helping some people understand it.[/QUOTE]</p><p><br /></p>

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