Why oil price rises and food price rises don't cause inflation?

Can as economist please tell me why this is so? I understand that it is a common fallacy, but don't know why! Many thanks.Why oil price rises and food price rises don't cause inflation?
Ok, many people think inflation is rising prices but inflation is actually increasing the money supply, which makes prices of goods go up as a consequence. The Federal Reserve has the power to effectively print as much money as it needs and the more money that gets printed and pushed into circulation, the more prices of goods go up.





To put it another way, how much as the dollar lost in value since W.W. II? About 90%. This has had a tremendous impact on the transfer of wealth in this country. Our Constitution never intended for us to use paper money as a payment for debts. Only gold and silver coin were to be used as payment of debt.





To the person who said rising oil and food prices cause inflation. It DOES NOT. Let me state again, Inflation is due to the increase in the money supply, which as a result, makes prices go up on all goods. Read some articles by Dr. Edwin Vieira, P.h.D., J.D. about the monetary and banking policies of the U.S. He has 4 doctrates from Harvard and is one of the foremost experts in Constitutional law and banking and monetary policies.





Watch this clip from Dr. Vieira and he will say this exact same thing. Watch the next five minutes.





http://video.google.com/videoplay?docid=鈥?/a>Why oil price rises and food price rises don't cause inflation?
Rising oil and food prices most certainly DO cause inflation.


The reason for the 'core' inflation numbers (w/o oil and food) is because the prices for these things are very volitile. Therefore, a 'core' measure w/o the very volitile components, is more indicative of a trend. But certianly both are important numbers.



We had 5% inflation over the last year, so they do but not as much as people think they should. Inflation is a measure of the price increase of everything we buy and the average person only spent 14% of the income on food and about 5% on gas, but most of the rests of our expenses like rent are fix, so the extra was hard to get. However this varies a lot for different households, and poor people in rural areas where people must drive a lot ended up spending 20% of their income on gas.





In economic theory is MV=GDP where M is the money supply, V is the velocity of circulation and GDP is the nominal value of goods and services in the country. This means that if V and production were constant the nominal price of goods would vary like the supply of money. However in our complex financial system no one really knows how to measure M and V and production is constantly changing, so it is not a very useful way of examining the real economy. Many people think that restraining the growth of money prevents inflation, but that is only true when you measure over decades, what really happens is the periods on inflation and deflation alternate so the net effect is no change in prices.


http://www.visualizingeconomics.com/2008鈥?/a>

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