Causes, Effects and Control of Inflation

Discussed in the post about meaning of inflation, we are now able to know what inflation means. In this post, I will focus on its causes and effects. There are many views regarding the causes of inflation as classical economists have a different perspective (money supply) and Keynesian economists blame different factor (when demand exceeds supply) for its occurring. Irving Fisher in this propounded theory often regarded as 'Quantity theory of Money' opines that inflation occurs when money supply increases. Fisher argued that value of money decreases after increase in money supply. When people receive more cash in their hands, they try to purchase limited goods and resources at high price due to the shortage or excess demand over the supply.
On contrary, Keynes believed that inflation occurs when total expenditure is greater than the total output of an economy. Keynes argued that real inflation occurs only after full employment of all resources available. Inflation before full employment is considered as semi-inflation. He categorized his causes into demand pull and cost push inflation. Demand pull inflation means when aggregate/total demand exceeds aggregate supply. It is the state where too many money chases few amount of goods. Similarly, when cost of factor of inputs(production) increases, the price of goods and services increases resulting in inflation and this type of inflation is supply shock inflation.
Discussing about the general causes, very minute factor which are gone unnoticed also plays important role in effect in inflation. Factors like increase in supply of money, increase in public and private expenditure, reducing taxation, increasing net exports, paying public debts, increase in black money, shortage of factor inputs, increase in factors of inputs, increasing interests, hoarding of businessmen, and global effect on factors of production also cause inflation in a state.
If inflation is under control then its progressive. But huge rate of inflation and hyper inflation are very hazardous for an economy. It has huge impact on production as productivity decreases (decrease in saving leads to decrease in investment and it leads towards low income and ultimately decrease in saving), effects distribution in an economy, effects the employment level, decreases government revenue, and increases immoral activities in the society and the important one is that it creates inequality due to its discriminating nature in which some category of people gain more and some heavily lose during inflation.
Controlling inflation is impossible for every nation and it is necessary as well because it is necessary. The main thing is that stable inflation rate should be maintained which is difficult. It can be controlled by various monetary measures (increasing bank rate and cash deposit rate), fiscal policy measures (increasing tax, deficit financing) and other similar methods like proper wage policy, population control, indexation(compensation paid for change in price level) . In my view, inflation is stubborn problem and however if the inflation rate is null, then there an economy will face widespread unemployment and the problem of Deflation(decrease in general price level along with the decrease in national output and national employment). My suggestion to all the readers as being the responsible economic unit, is that we should reduce our unproductive expenses and have significant role in the productive sectors so that an economy can remain in progress.