People worry about the cost of healthcare, which takes up a fair amount of the national pocketbook. This is particularly true in the United States, where we feel we are paying more than we should, based on the cost of healthcare in other civilized nations.
My question is, to what extent can inflation explain rising healthcare costs?
Note, inflation does not result from rising prices. Inflation is one cause, among several, that can cause some prices to increase.
Here, we are using a narrow definition of “inflation.” Specifically, an increase in the money supply. An increase in the supply of money doesn’t always cause an increase in prices. But, all other things being equal, it should.Read more