Is Inflation a Policy Choice or an Unavoidable Economic Reality?

[soupbet]

Inflation is often presented as something natural and unavoidable, but I’m not fully convinced that’s always true.

Some argue inflation is mainly caused by external shocks like wars, pandemics, energy shortages, or supply chain disruptions. Others believe it’s largely a result of deliberate policy decisions such as excessive money printing, low interest rates, and government debt expansion.

From a historical perspective, inflation seems to spike most during periods of aggressive monetary intervention, while more disciplined systems tend to show longer-term price stability.

So my question is:
Do you think inflation is mostly a policy choice made by governments and central banks, or an inevitable outcome of modern economic systems?

Also curious to hear whether you see Bitcoin as a real hedge against this, or just another speculative asset reacting to the same forces.

[freedomgo]

Mostly it’s policy-driven, especially when we’re talking about long-term inflation. It really depends on who’s sitting there and running the country. When leaders keep borrowing money, and worse, when those funds get corrupted and don’t actually return value to the economy, that’s when real economic trouble starts.

At its core, inflation just means lower buying power. Your money buys less over time. And that doesn’t happen by accident. It’s usually the result of bad decisions at the top. So yes, they create the problem. In theory, we can always slow or stop it by choosing the right leaders, but that’s easier said than done.

As for Bitcoin, I don’t see it as a good hedge in the short term. It still moves with the market. But long term, it makes sense. Fixed supply, no one printing more when things go wrong. That’s where its value really shows.

[Arenga pinnata]

Inflation can occur naturally, such as due to a country's mismanagement or due to climate change or natural disasters that cause an important supply to become scarce in the market. Meanwhile, demand continues to increase, which will cause prices to skyrocket.

Even when businesses are growing in developing countries, we can see banks actively disbursing credit, which increases the money supply and indicates more transactions, or growth in purchasing power. However, this usually raises inflation, but within normal limits.

However, I think inflation can also be deliberately created by certain parties who have the power to do so. So, yes, inflation can actually be deliberately created, such as through central bank policies that deliberately cause inflation to rise slightly, which can be beneficial in terms of encouraging market circulation, such as boosting purchasing power and investment.

However, what we may rarely realize is that there are parties that can actually benefit from inflation, namely countries with debt. Although the nominal amount or total debt of a country does not decrease, its value actually decreases. I hope someone understands what I mean.

[peter0425]

So my question is:
Do you think inflation is mostly a policy choice made by governments and central banks, or an inevitable outcome of modern economic systems?

It’s not exactly inevitable but it becomes convenient for the government. It’s of course a result of policies because they are trying to save what can be saved. Inflation reduces debt.

Also curious to hear whether you see Bitcoin as a real hedge against this, or just another speculative asset reacting to the same forces.

Bitcoin’s supply would never be ruined by any policy changes so it’s a hedge against inflation.

[pooya87]

Some argue inflation is mainly caused by external shocks like wars, pandemics, energy shortages, or supply chain disruptions. Others believe it’s largely a result of deliberate policy decisions such as excessive money printing, low interest rates, and government debt expansion.

These are two different types of inflation. The first one is natural and it happens everywhere. But most importantly the "natural inflation" is temporary. For example in different seasons with the crazy weather (eg. heavy rains leading to floods) the agricultural products suffer losses and the shortage it causes leads to prices temporarily going up because the value of these products have gone up.

But the second type is not natural and is like the government stealing from every citizen. Their bad policies and their choice of the laziest option to cover their deficits (ie. printing fiat) is the main reason for such inflation. This type is permanent and the prices that go up like this will never come down because their value has not risen, the price has. And that's because the value of fiat dumps.

[Agbe]

Inflation can occur naturally, such as due to a country's mismanagement

All the points you gave are correct. And a good government would readjust himself to reduce the inflation once discovered that, it is from their end. But bad government would give a deaf ears and making the masses to suffer in the inflation by buying things with higher prices.

or due to climate change or natural disasters that cause an important supply to become scarce in the market. Meanwhile, demand continues to increase, which will cause prices to skyrocket.

Like my region, flood period, we buy things with very high prices and also in the festival period of Christmas, New Year and Easter. These festival time sellers used it to inflate prices of goods and services. This also causes by the greediness of the sellers and services rendered. But in the natural disasters time, transportation is hard because if it is flood period, motor vehicles can't move and those who provides other means of transportation like boat would like to increase their fees. But the government can provide those things to help the citizens at the ti.e of the climate change until everything come back to normal.

[JaredIbrahim]

Inflation is often presented as something natural and unavoidable, but I’m not fully convinced that’s always true.

Some argue inflation is mainly caused by external shocks like wars, pandemics, energy shortages, or supply chain disruptions. Others believe it’s largely a result of deliberate policy decisions such as excessive money printing, low interest rates, and government debt expansion.

From a historical perspective, inflation seems to spike most during periods of aggressive monetary intervention, while more disciplined systems tend to show longer-term price stability.

So my question is:
Do you think inflation is mostly a policy choice made by governments and central banks, or an inevitable outcome of modern economic systems?

Also curious to hear whether you see Bitcoin as a real hedge against this, or just another speculative asset reacting to the same forces.

Tbh, it's a mix of both. External shocks are the spark, but policy choices are the gasoline thrown on it. Central banks had the choice to let the market correct or print insane amounts. They chose print. So yeah, mostly a policy choice to kick the can. Bitcoin is the hedge against that specific choice, not necessarily every kind of inflation.

[Satofan44]

Tbh, it's a mix of both. External shocks are the spark, but policy choices are the gasoline thrown on it. Central banks had the choice to let the market correct or print insane amounts. They chose print. So yeah, mostly a policy choice to kick the can. Bitcoin is the hedge against that specific choice, not necessarily every kind of inflation.

Yes, but also no. Inflation is always a policy choice and the choice leads to an environment that responds differently to different shocks. You should never talk about external shocks in a general way, because they are either supply-side, demand-side or a mix of both. How the existing environment responds depends on the shock. In an inflation-driven environment:

• Supply-side shock. Usually cost-push inflation, but anyway it leads to increased inflation and poses a risk of runaway inflation.
• Demand-side shock. Less demand, causing decreased inflation.

In the deflation-driven environment it looks pretty similar, but the response measures will be different. In a deflation-driven environment bank would target a controlled deflation rate of 1-2%.

• Supply-side shock. It could cause an increase in inflation.
• Demand-side shock. It could cause a decrease in inflation making existing deflation worse and poses a risk of runaway deflation.

Basically the risks are inverse. As you can read in an inflation-driven environment the primary risk is of runaway inflation, and in a deflation-driven environment the primary risk is of runaway deflation. We are in a world of extremely depreciating monetary value primarily because of money printing, a policy-choice and not because of temporary shocks.

[Hispo]

Actually inflation and the way it is handled depends much on whether the country is highly dependent in consumerism or not. For example, the United States and Canada are countries which need their residents to continuously consume goods and services, so the economy can continue to grow at a good pace. In order to encourage people to spend money on those goods and services the federal reserve of those countries try to keep a stable growth of inflation annually, so people would prefer to spend their money as fast as possible, instead of accumulating it on saving accounts.

There are countries which are not so dependent on consumerism, so they can afford to have zero inflation or even negative annual inflation in their economies.

[Fortify]

The only situation where a government might want to encourage inflation is if it's in some kind of deflationary spiral, or stagflation, as Japan was for quite a long time. Outside of that scenario no sane government would want the higher levels of inflation that we've seen the last year in pretty much every country. It means people feel and actually are poorer. Most countries have also evolved to separate government and the central bank, but an independent central bank definitely does not want large amounts of inflation and usually sets the target in the 2-3% range. If peoples wages are not keeping up with that inflation rate then every year the average person will have less to spend into the economy.

[Findingnemo]

As long as the fiat system is in place which is pegged to nothing the system tried whatever to keep it aflot as well as helps the money in circulation of the economy, which is why inflation is better than stagflation or deflation but for the end user the inflation is going to eat away your value so try to ignore the inflation in every possible way and one way to avoid is with debts which is a big advantage for the one who knows how to use it at the benefit of inflation.

[Lida93]

So my question is:
Do you think inflation is mostly a policy choice made by governments and central banks, or an inevitable outcome of modern economic systems?

Inflation occurrence in any country's economy is inevitable but the it's mostly severe with bad economic policy decisions by the policy makers. The most fortunate of the situation is found within the third world countries where excessive borrowing and money printing has become a norm ontop bad policies which has really exacerbated the inflationary level in countries over there than anywhere advanced.

[abaeze]

This is mostly due to policy and management differences, especially when we talk about long-term inflation. It really depends on two things. 1. Who is running the country. 2. What policies the economic structure is based on.

When leaders borrow money due to a weak economy, those funds become corrupt and those loans are not repaid. That's when the real economic problems begin. But the solution to this problem lies within Bitcoin, I see it as a good hedge in the long run. Because of its fixed supply, meaning no one can print more if they want. Which will help stabilize the market or the economy gradually.

[Sticky Bomb]

or due to climate change or natural disasters that cause an important supply to become scarce in the market. Meanwhile, demand continues to increase, which will cause prices to skyrocket.

Like my region, flood period, we buy things with very high prices and also in the festival period of Christmas, New Year and Easter. These festival time sellers used it to inflate prices of goods and services. This also causes by the greediness of the sellers and services rendered.

Sometimes, these things are not always as we think. The sellers might still be at the receiving end which makes them inflate prices. In such periods the grassroot government inject the inflation locally by inflating ticket prices which leads to high transportation costs and even higher cost for selling spots. These  sellers have no other options than to inflate the prices too in order to cover their costs and still be profitable, although in some cases, they still inflate the prices out of greed.

[Text]

actually I don’t think it’s purely one or the other, it’s a mix but policy plays a bigger role than most people want to admit. As for Bitcoin I see it more as a long term hedge against monetary mismanagement not a perfect short term inflation hedge. Short term behaves like a risk asset sure but long term its fixed supply directly challenges the idea that money can be endlessly expanded w/o consequences so yeah inflation isn’t unavoidable like gravity, it’s mostly the result of human decisions & Bitcoin exists cause people are starting to question those decisions.

[EverKaizen7]

Inflation is often presented as something natural and unavoidable, but I’m not fully convinced that’s always true.

Some argue inflation is mainly caused by external shocks like wars, pandemics, energy shortages, or supply chain disruptions. Others believe it’s largely a result of deliberate policy decisions such as excessive money printing, low interest rates, and government debt expansion.

From a historical perspective, inflation seems to spike most during periods of aggressive monetary intervention, while more disciplined systems tend to show longer-term price stability.

So my question is:
Do you think inflation is mostly a policy choice made by governments and central banks, or an inevitable outcome of modern economic systems?

Also curious to hear whether you see Bitcoin as a real hedge against this, or just another speculative asset reacting to the same forces.

I don’t think governments fully control inflation, but they definitely amplify it. Supply shocks start the fire, policy adds fuel. As for BTC, I see it more as a long-term insurance policy than a perfect hedge. It won’t protect you from every CPI print, but it might protect you from long-term currency debasement.

[hyudien]

Some are due to wrong policies, others are due to natural events, cases that often occur are due to natural disasters such as crop failures, supply chain disruptions, war, or increases in global energy prices and are generally temporary so they will subside as production and distribution conditions recover. The worst is inflation due to wrong policy making from the government, this is painful because the recovery takes a long time, for example, Zimbabwe which is still struggling with inflation.

[abhiseshakana]

The notion that inflation is a policy choice is not wrong, but it is incomplete for the modern economic era. Today, inflation is not simply about too much money chasing too few goods; the world is facing multi-layered structural inflation. Monetarily and fiscally, the national debt is enormous, policy space is narrow, high interest rates risk a debt crisis and recession, while low interest rates mean continued inflation, and central banks are caught in a policy trap. In terms of supply and geopolitics, deglobalization, war, reshoring, and energy conflicts make supply chains more expensive and inefficient, leading to higher logistics and energy costs, making inflation sticky.

Psychologically and behaviorally (this is often overlooked), yet it is the biggest driver. Today's inflation is not just about production costs, but the normalization of high prices through perception. In classical economics, demand was considered natural. In the modern economy, demand is systematically constructed. The advertising industry plays a role in inflation by creating engineered demand. Imagine: a global advertising industry worth hundreds of billions of dollars, algorithms, data, AI, and influencers, creating a consumption ecosystem that is constantly stimulated to encourage consumers to buy more frequently, buy more expensively, replace items more quickly, and associate high prices with value and status. This results in an unstoppable psychologically engineered desire for consumption.

So, as long as consumption continues to grow and demand continues to be engineered, inflation is not an anomaly, it is a feature of the system. Inflation is not simply the result of bad policies or external shocks, but rather the result of a modern economic system that relies on debt, consumption, and demand engineering through the advertising industry. In such a system, inflation is no longer easily controlled without undermining social and political stability.

[asriloni]

Inflation ain't a policy driven, but the wrong policy can make it even worst. Inflation basically unavoidable thing caused by it was coming due to the supply and demand. i.e the growth of population gives more demand for the housing while it's getting even more limited, which is triggering the inflation to the housing price to happen.

Basically, many agreed to put 2% as normalcy, however, this sometimes can be higher due to the wrong policy being made by our government.

Talking about Bitcoin, it's working the same like any commodity, however, limited supply makes it able to hedge against the inflation caused by it can inflated higher. That's the reason it can hedge against the inflation.