Reply To: Inflation: What's holding the dam together?

[jmherbener]

A falling purchasing power of money (or rising prices in general) occurs when the money stock increases relative to the demand to hold money. Although the money stock has been increasing during the past few years, the demand for money has been rising also. On balance, then, prices have not increased much.

Here’s the great economic historian, Bob Higgs, on the topic:

http://blog.independent.org/2012/12/15/more-monetary-peculiarities-of-the-past-five-years/