Coffee Traders' Forum - A Discussion about Coffee Futures Trading
Coffee Traders Discussion Forum
As the economics become the topic allow me to sum up the relation between inflation and productivity (efficiency)
(I partially borrow word from anonymous Engl. native speaker because I would not be able to say it better in English)
"If you double the amount of goods produced, but keep the amount of money the same, the price of each good must halve.
Thus, increases in productivity cause relative decreases in the price level. If the money supply is constant, productivity growth will tend to cause deflation"
Now, we all now that deflation is harmful to how economy works past 100 years (money needs to be spent/invested).
Therefore central banks increase the money supply and this cause or actually that is the meaning of inflation.
Without increased productivity there would not be any natural inflation and vice versa.