The debate on the real cause of inflation, and whether its positive effects outweigh the negative ones is growing steam, with the talks of more Quantitative Easing under way. Is QE3 going to generate more inflation or not? Is the view that QE and further market operations (POMOs) will fuel the increase in prices ?
To answer these questions, one has to start from the root of the problem. What is inflation and how should it be measured ?
