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Blink 3 of 8 - The 5 AM Club
by Robin Sharma
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Inflation Matters summary
Pete Comley
Inflationary Wave Theory, Its Impact on Inflation Past and Present ... and the Deflation Yet to Come
19 mins
Brief summary
Inflation Matters by Pete Comley provides a comprehensive guide on the effects of inflation on the economy and how to protect against it. The book offers practical advice on investments, savings, and preparing for the future amidst inflating prices.
Table of Contents
Inflation Matters
Summary of 5 key ideas
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Key idea 1 of 5
Inflation is an increase in prices typically caused by an increase in the money supply.
We’ve just outlined the definition of inflation. To recap: it’s a persistent increase in the prices of goods or services, or a persistent decline in the purchasing power of money.
How can we envision this? A lot of introductory economics textbooks would illustrate it through an example like the following.
Say you have five bakers and five brewers. Respectively, they each sell a loaf of bread and a pint of beer every day. The loaves of bread and the pints of beer cost one gold coin each. There are ten gold coins total in the whole world. One day, someone finds another ten gold coins. These are split evenly among the ten people. However, the number of bread loaves and beer pints remains the same – five and five. Because people feel that they have more money, they start trying to outbid each other to get extra bread and beer. As a result, the price of bread and beer both increase. Now each loaf and each pint costs two gold coins instead of one.
In real life, inflation follows a much slower and more complex route than this. But as the example shows, inflation is tightly connected to the money supply – that is, the total amount of money in an economy. If the money supply is greater, prices will go up as everyone tries to outbid one another to buy a limited amount of goods.
In the bread and beer example, the money supply increased because someone discovered a bunch of gold coins. In real life, increases in the money supply are typically caused by two different factors: central banks printing new money and private banks making loans to individuals or companies.
An extreme and famous example of the first situation happened during the Weimar Republic in Germany in the early 1920s. In the post-World War I period, Germany’s government was in extreme debt. In order to finance that debt, it decided to print more money – lots of it. This worked, of course, and all of the debt was swiftly repaid. However, in the process, the government created hyperinflation – basically, an extreme case of inflation. Ultimately, this resulted in prices having risen by a massive 29,500 percent by 1923. Large swaths of the population saw their material wealth – at least, that of it in cash – wiped out in an instant.
Fortunately, hyperinflation doesn’t happen often. Much more frequently, increases in the money supply happen when private banks make loans – because, of course, banks loan out money they don’t actually possess.
What’s most important to remember is that the size of the money supply impacts inflation. But we do need to add in an extra wrinkle: this effect is only apparent in the medium term. In the short and long terms, the money supply has a weak connection with inflation. Let’s explore that a little further.
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What is Inflation Matters about?
Inflation Matters (2015) takes what’s often presented as a dense and complicated – not to mention boring – subject and turns it into something anyone can understand. Using simple, clear explanations, it presents the reasons why inflation exists, what and who perpetuates it, and how it impacts both the economy and society as a whole. Analyzing historical trends, it also presents a theory that inflation tends to follow a wavelike pattern over time – but that it doesn’t necessarily need to remain that way.
Inflation Matters Review
Inflation Matters (2018) explores the complex and often misunderstood world of inflation, offering readers a deeper understanding of its impact on our daily lives. Here's why this book is worth reading:
- With clear explanations and relatable examples, it demystifies the concept of inflation, making it accessible to all readers.
- Through carefully researched data and analysis, it highlights the potential risks and opportunities that inflation brings, helping readers make informed decisions.
- By delving into historical case studies and future scenarios, it stimulates critical thinking and enhances our ability to navigate the ever-changing economic landscape.
Who should read Inflation Matters?
- People concerned about rising inflation and what it means for them
- Amateur investors and economists
- Anyone who wants to become more economically and financially literate
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Inflation Matters FAQs
What is the main message of Inflation Matters?
Understanding the impact of inflation and how to navigate its effects on personal finances and investments.
How long does it take to read Inflation Matters?
The reading time for Inflation Matters varies, but it typically takes a few hours. The Blinkist summary can be read in just 15 minutes.
Is Inflation Matters a good book? Is it worth reading?
Inflation Matters is worth reading as it provides valuable insights into the complex world of inflation and its implications for individuals.
Who is the author of Inflation Matters?
The author of Inflation Matters is Pete Comley.
What to read after Inflation Matters?
If you're wondering what to read next after Inflation Matters, here are some recommendations we suggest:
- The Economist: Numbers Guide by Richard Stutely & The Economist
- Shape by Jordan Ellenberg
- How to Win Friends & Influence People by Dale Carnegie
- Leading Through Inflation by Ram Charan & Geri Willigan
- How to Make a Few Billion Dollars by Brad Jacobs
- The Myth of the Strong Leader by Archie Brown
- Mastering Homebrew by Randy Mosher
- The Stoic Mindset by Mark Tuitert
- Hagakure by Yamamoto Tsunetomo & Alexander Bennett
- Elon Musk by Walter Isaacson
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