Some people believe inflation is the change in price of a basket of products/services over time.
Unfortunately, this measure of inflation fails to accounts for changes in price due to changes in the demand and supply of said products/services irrespective of the change in demand from the increase in the money supply.
What happens is that a company borrows money (increases the money supply and thus increases inflation) to increase their production of products/services. This increase in the supply reduces the price of products/services so inflation if measured by change in price of products/services appears to have not changed (or not changed by much) despite the money supply going up because production has also gone up; however, the value of the money has indeed gone down, it's just the price of the products have also gone down because the supply increased.
Measuring inflation as the change in price hides the real inflation of the money.
Some people believe inflation is the change in price of a basket of products/services over time.
Unfortunately, this measure of inflation fails to accounts for changes in price due to changes in the demand and supply of said products/services irrespective of the change in demand from the increase in the money supply.
What happens is that a company borrows money (increases the money supply and thus increases inflation) to increase their production of products/services. This increase in the supply reduces the price of products/services so inflation if measured by change in price of products/services appears to have not changed (or not changed by much) despite the money supply going up because production has also gone up; however, the value of the money has indeed gone down, it's just the price of the products have also gone down because the supply increased.
Measuring inflation as the change in price hides the real inflation of the money.