Inflation is generally driven by money growth outstripping the economies’ capacity to produce additional goods and services, or supply shocks which tend to be self-correcting.

We wrote a white paper on inflation several years ago, before inflation really took off as we saw the massive increase in M2. The equation we referred to was MV=PQ, or money *velocity = price * quantity, which is nominal GDP on both sides. The

main factors in this equation are money growth, as the velocity does not change much, and price as quantity cannot be changed quickly.

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