Efforts made by the US actually provide a new problem for inflation.

[gantez]

You can perfectly avoid inflation in fiat and it does not need to have a limited supply. It is a simple as printing money based on the real growth of the economy so that the monetary mass is in sync with the real demand for money. To explain it for a 9 year old: You print the money that is required. If you print less, there is deflation, if you print more there is inflation.

In theory.  But I suppose in practice it's unlikely to happen that way.  Partly because new money issuance can arise from many sources, but mainly that it's not always possible to accurately forecast the real level of demand. 

On top of that, there's also the issue of governments with their (arguably absurd) notions of chasing perpetual economic growth forever, but perhaps that's another discussion altogether.

I have noted inflation being just everywhere in different countries and this causing instability in economy and getting countries to disagree because of the choice of world economic policies. Poor countries want more realistic policies but relying on economic theories to developing countries not solving the problem of inflation but increasing it more and affecting tax rate.

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[Gyfts]

I don't think you can "avoid" inflation in fiat.  It's an integral part of debt-based money.  Governments just try to keep inflation somewhat under control when they can, so that it doesn't rise too quickly.  Usually not with any great deal of success, but that's the theory, at least. 

You technically could if there was a finite supply of fiat. A currency based on the gold standard wouldn't have any inflation, granted the supply of gold was steady. Even without a gold standard, a fiat currency based on magic pixie dust could theoretically not have any inflation, as long as the government is unwilling to create more supply.

Government targets the inflation rate to be at 2 percent, so they'll make adjustments accordingly. The problems arise when you try to increase the money supply too rapidly, like the US does by having a debt balance sheet of trillions of dollars -- predictable result is an insane 7 percent inflation rate (compounded by COVID, of course).

You can perfectly avoid inflation in fiat and it does not need to have a limited supply. It is a simple as printing money based on the real growth of the economy so that the monetary mass is in sync with the real demand for money. To explain it for a 9 year old: You print the money that is required. If you print less, there is deflation, if you print more there is inflation.

Bitcoin is NOT inherently deflationary.

The central banks purposely target inflation to be at 2 percent, so even in a perfect world the money supply coincided perfectly with GDP, it'd be difficult to pull off. You're one economic dip away from ruining the entire system before the central banks panic and begin injecting money into the economy to save industries that would have probably crashed had it not been for intervention. Just use COVID as an example, debt of most countries began to sky rocket. The US in particular has their inflation rate out of control so it isn't merely just a problem with supply chains.

That's the issue with centralized economics, the entity in control inevitably loses control.

[Darker45]

Well, inflation will always be here, at least for as long as the current economic paradigm is in place. Money will always have to weaken regularly. That's necessary in the economic model that is prevailing right now. What is important, though, is that the level of inflation should fall within the range which is considered tolerable for any economy to continue to thrive.

However, things are not smooth nowadays with the pandemic wreaking havoc in economies around the world for years now. That's true even in rich countries like the US. It must be hard even for them to somehow strike a balance between keeping the finances of the country afloat at the same time tempering inflation in the midst of health lock downs.

[jrrsparkles]

The only way to avoid inflation is to stop printing the money but no government is going to do it and US printed more money in the 2020 year for stimulus and as temporary solution to bring money flow in their economy but the effect will stay for longer period even for a decade.

[DooMAD]

The only way to avoid inflation is to stop printing the money but no government is going to do it and US printed more money in the 2020 year for stimulus

But new money also comes into existence through loans and mortgages.  It's not just the government and their stimulus packages.  Banks are creating new money too.  And (although most governments neglect to include the cost of housing in their published inflation rates) it absolutely does have an impact on the true rate of inflation.