8 thoughts on “Lecture 7. Inflation is a “real” problem and economic growth is the real solution.”
Professor Hearn, your explanation of inflation as more than just ‘too much money chasing too few goods’ is very enlightening. I appreciate the way you highlight structural factors such as supply chain bottlenecks, rising energy prices, and policy missteps as contributors. It challenges the oversimplified view that inflation is only monetary, showing how real-world complexities matter.
Question Professor, in your opinion, which factor has a stronger long-term influence on inflation: persistent monetary expansion (money supply growth) or recurring supply-side shocks (like oil crises, wars, or climate disruptions)? And how should policymakers strike the balance between monetary control and structural reforms?”
Supply side shocks apply pressure on those who control monetary expansion and if they react then inflation will result from the monetary contraction. Supply shocks rarely if ever contract the overall supply of products to the economy which would be the requirement to cause inflation. This may help you further.
Professor JohnHearn, I really appreciate the clear explanation of the difference between the CPI and RPI. It’s a key detail that’s often misunderstood, and you made it very easy to grasp.
You also cite out an argument that true economic growth requires an outward shift of the production possibility boundary.
Question please; What are the most effective policies a government can implement to encourage the kind of long-term innovation and investment that leads to this shift, rather than just short-term output increases
Professor Hearn, I really appreciate the lecture and from it I learned that inflation is a rise in the average level of prices caused by too much money chasing too few goods, and that it is a burden to an economy because it distorts market signals and redistributes wealth. I also learned that true economic growth is an increase in productive capacity per capita, which is primarily driven by invention and innovation. That also economic growth is most effectively achieved in free market, capitalist societies with minimal government intervention.
Based on the video, The question I have is that you dismiss “cost-push inflation” as a myth because it doesn’t increase the number of monetary units. Could you elaborate on what distinguishes a “myth” from a valid economic theory in this context?
Thank you professor for your remarkable submission it was very inciteful. I appreciate
i have a question
Why is cost push not a cause of inflation ?
You mentioned that economic growth is achieved through invention but there are other factors as well that can lead to economic growth. This depends on the different countries (developed and developing countries) some factors are highlighted below ,
Human capital development
infrastructural development
economic factors like investments, trade, fiscal policies
Correct there are a variety of causes of economic growth,but by far the most important are invention and innovation.
The may help you to understand why cost push is a myth.
Go to my blog myprofessorjohnhearn.org and read the first blog article in the last list
jbhearn 
Professor Hearn, your explanation of inflation as more than just ‘too much money chasing too few goods’ is very enlightening. I appreciate the way you highlight structural factors such as supply chain bottlenecks, rising energy prices, and policy missteps as contributors. It challenges the oversimplified view that inflation is only monetary, showing how real-world complexities matter.
Question Professor, in your opinion, which factor has a stronger long-term influence on inflation: persistent monetary expansion (money supply growth) or recurring supply-side shocks (like oil crises, wars, or climate disruptions)? And how should policymakers strike the balance between monetary control and structural reforms?”
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Supply side shocks apply pressure on those who control monetary expansion and if they react then inflation will result from the monetary contraction. Supply shocks rarely if ever contract the overall supply of products to the economy which would be the requirement to cause inflation. This may help you further.
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Professor JohnHearn, I really appreciate the clear explanation of the difference between the CPI and RPI. It’s a key detail that’s often misunderstood, and you made it very easy to grasp.
You also cite out an argument that true economic growth requires an outward shift of the production possibility boundary.
Question please; What are the most effective policies a government can implement to encourage the kind of long-term innovation and investment that leads to this shift, rather than just short-term output increases
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Thank you Angela. It is easy to suggest what government should do but they are incapable. To grow the economy we need government to step away and release market forces. This may help you understand my views.
https://jbhearn.wordpress.com/2020/11/02/lecture-7-inflation-is-a-real-problem-and-economic-growth-is-the-real-solution/
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Professor Hearn, I really appreciate the lecture and from it I learned that inflation is a rise in the average level of prices caused by too much money chasing too few goods, and that it is a burden to an economy because it distorts market signals and redistributes wealth. I also learned that true economic growth is an increase in productive capacity per capita, which is primarily driven by invention and innovation. That also economic growth is most effectively achieved in free market, capitalist societies with minimal government intervention.
Based on the video, The question I have is that you dismiss “cost-push inflation” as a myth because it doesn’t increase the number of monetary units. Could you elaborate on what distinguishes a “myth” from a valid economic theory in this context?
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Hopefully this will help.
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Thank you professor for your remarkable submission it was very inciteful. I appreciate
i have a question
You mentioned that economic growth is achieved through invention but there are other factors as well that can lead to economic growth. This depends on the different countries (developed and developing countries) some factors are highlighted below ,
LikeLike
Correct there are a variety of causes of economic growth,but by far the most important are invention and innovation.
The may help you to understand why cost push is a myth.
Go to my blog myprofessorjohnhearn.org and read the first blog article in the last list
LikeLike