[WalterBright]

> Inflation means, afaik, only that the same amount of money has lesser purchasing power than it previously had.

That's a tautological definition.

Money's value is determined by supply and demand, just like everything else. If there's more money representing the same amount of goods, the money gets devalued and you have inflation.

To understand inflation one must understand how money is created and destroyed, i.e. what determines the supply of money. Spending money faster does not create more supply, and McDonald's raising their prices is not inflationary because they did not create more money.

Money is created by printing it, or by the creation of debt. Money is destroyed by burning it or by paying down debt.

[y4mi]

Well, Wikipedia seems to agree with that tautological definition.

While McDonald's alone increasing their price wouldn't be inflation, it could become that if a significant part of the businesses in that location increased theirs as well.

It's just really hard to find examples of this today. It's mostly limited to holiday hotzones, rent and similar.

[WalterBright]

> Wikipedia seems to agree with that tautological definition.

It reminds me of when I saw a technical analyst on CNBC sagely note that the reason the P/E ratio was high was because the Price rose faster than the Earnings. Sheesh!

It is not inflationary if McDonald's increases their prices. Spending more at McDonald's means you have less to spend elsewhere. Your spending does not create more money to replace it.

Consider if the money was a fixed number gold coins instead, and you'll see that anyone raising prices does not result in more gold coins.

[y4mi]

well, now we've gone full circle.

Inflation does not mean that the amount of money was increased. This is "just" the primary way a government or central bank controls the inflation

The definition of inflation is limited to the devaluement of a currency. This means that it can only be evaluated by comparing that currency to actual goods / services that can be bought / used.

[EGreg]

All definitions are tautological :)