Author: Albert Mcbell Ninepence
Ashesi University College, Ghana
Abstract
Money serve significant economic functions which loses its real value when affected by the lethal disease of inflation. More often governments and policy makers are blinded with a false dichotomy: inflation or unemployment which is an illusion. The major dilemma is whether we have higher unemployment as a result of higher inflation or is it an impermanent side effect of rectifying inflation? In this paper, the central origin of inflation have been identified as a monetary phenomenon. The paper also extends to expand on why citizens of Ghana rationally switched to the dollar, including inflation trends in Ghana. More pertinently in this contextual analysis is the explanation on how the supply of money determines the price level. As John Stuart Mill wrote a century ago: “There cannot, in short, be intrinsically a more significant thing in the economy of society, than money; except in the character of a contrivance for sparing time and labour. It is a machine for doing things quickly and commodiously, without it: and like many other kinds of machinery, it only exerts a distinct and independent influence of its own when it gets out of order”, the currency of a nation plays vital roles to its economic prosperity and this is why it seems reasonable to analyze inflation (a fatal disease to the value of money) to present concrete remedies.
Keyword: Anatomizing Inflation, Cause of Inflation, Inflation in Ghana
