[yyy888sss]

Inflation is the expansion of the money supply (eg by money printing). A long term rise in prices (houses, stocks, CPI) is the consequence of inflation, just as a rising water level in a lake is the result of rain. The global economy is like a lake with growing capacity, so prices UNDERSTATE the true rate of inflation.

[thelamest]

This is not the common definition (cf. https://en.wikipedia.org/wiki/Inflation), but a narrower one (https://en.wikipedia.org/wiki/Monetary_inflation). Semantic difference, but one that remains a little confusing and harkens back to old economic debates. Focusing on policy causes of price changes is preferred among authors who want to tie inflation only/mostly to central bank actions, but mainstream economics, with Friedman etc., works with a slightly wider model (money supply is a key lever, but other things matter as well).

[yyy888sss]

Defining inflation as rising prices is the newer, MORE narrow definition as measurements such as CPI are capturing the downstream effects of a fundamental cause (creating money).

[whimsicalism]

Inflation is and always has been about changes in the price level. If velocity halves and money supply doubles, there is no additional price level change - so it is not a "fundamental cause."

[AnimalMuppet]

It's the expansion of the money supply faster than the expansion of the real economic output.

[whimsicalism]

Money supply * velocity faster than real output.

[AnimalMuppet]

True. And it occurs to me that there's a positive feedback loop there. When inflation starts, people tend to pull their purchases forward in time, if they can - they buy before the price goes up. That increases the velocity, which is inflationary, even if the money supply does not increase any further.