> You said in the comment above

How do you read “price levels are a function of both money demand and money supply” and get that?

Going back to the top, you claimed “riding [sic] salaries do not lead to inflation.” That is nonsense. Even if we ignore that rising salaries cause the money supply to increase through increased velocity, wealth effect and credit creation. (This is why when the economy is strong central banks raise rates to keep price levels stable. You have to destroy money to make up for the money being created by the private sector.)

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reliabilityguy 3 days ago | parent [-]

> You have to destroy money to make up for the money being created by the private sector.

In other words, to keep inflation at bay, one of the things you do, you restrict money supply.

	▲	JumpCrisscross 3 days ago \| parent [-]
		> to keep inflation at bay, one of the things you do, you restrict money supply Again, nobody said money supply doesn’t affect price levels. But in this example, rising wages caused the inflationary impetus without any money printing. To correct for that, the money supply must be reduced. If you’re piloting a plane, deflecting the control surfaces will move the plane. But so will winds. If winds buffet your plane you have to deflect control surfaces to get back to where you were. That doesn’t mean the wind doesn’t exist. Rising salaries can cause inflation all on their own. Even in an economy with a fixed money supply. (So can printing money, but nobody was debating that.)