Dr Sam Wylie

But there's another thing, and that's how much money there is in the economy.

And so you can imagine that the price level depends upon how much money there is in people's bank accounts and in their purses and wallets and the like.

I mean, say that the central bank, which we'll talk about later on, the Reserve Bank, say that the Reserve Bank was to increase the amount of money that everyone has by a factor of 10.

So we're going to add a zero to every note that's in your purse or wallet.

We're going to add a zero to your bank account.

then obviously the amount of money in the economy has gone up by a factor of 10, and the price of everything will go up by a factor of 10.

So there's two things that are driving inflation.

Is demand growing faster than supply?

Is there a lot of money in circulation?

And both of those things in COVID-19 went up a lot.

There was a lot of stimulus of the economy, and the Reserve Bank, the central bank, pumped a lot of money into the economy.

So

So, I know that's a very long-winded answer and I'm sorry if I've banged on about that for ages, but I think it helps to sort of lay those things out.

Thanks, Kate.

Thanks for inviting me.

Hi, Owen.

It's not surprised.

It was inevitable to a certain extent, Owen, that inflation would become the big question after COVID-19 because inflation, as you know, means the prices in the economy going up, prices of cars, of houses, of restaurant meals, of clothing, of everything, of all the goods and services, goods like, as I said, cars and computers and phones and services like Uber rides and restaurant meals and

and holidays and the like, and education and the like.

So the price of goods and services going up in general across the economy, that's what inflation means.