Inflation, Deflation, & Simplification: The 8 Things That Influence Prices | Frankly 115
The Great Simplification with Nate Hagens
Nate Hagens
4.8 • 549 Ratings
🗓️ 5 December 2025
⏱️ 26 minutes
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Summary
In this week's Frankly, Nate explores how the prices we encounter in our daily lives are influenced by not only how much money is in the system, but also by resource depletion, technology, affordability by 'the masses,' and trust within a complex global system.
Prices are deeply intertwined with the biophysical reality that underpins our society, and are affected by major forces that often operate unseen to the average consumer. Other forces – like leverage, complexity, and currency reform – also have longer term repercussions within our monetary system. These have the ability to create both inflationary and deflationary effects on price, amplifying notions of prosperity and fragility within our current social contract. Ecological instability, often treated as peripheral to financial/price analysis, has emerged as another driver of prices, even as extreme weather, biodiversity loss, and breached planetary boundaries will increasingly feed directly into the cost structures of our modern civilization.
Where are the gaps within our existing conceptions of money and prices? What might follow the past few centuries of increasing societal and economic complexity? And how do prices – and societies – change when monetary claims and physical reality begin pulling in opposite directions?
(Recorded December 1st, 2025)
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Transcript
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| 0:00.0 | Good morning. |
| 0:02.0 | 10,000 years ago, and probably 50,000 years ago, in what's now known as Tanzania, our ancestors |
| 0:10.0 | price signals, gazelles and tubers and fruit, and other things. |
| 0:18.0 | Today it's the numbers that are listed on groceries and rent and gas and tuition. |
| 0:23.6 | Little barcodes everywhere asking us yes or no. And how often do we ask ourselves, why is that number there? What is that price? What forces shaped it? |
| 0:35.4 | Milton Freeman famously said, inflation is always and everywhere a monetary |
| 0:40.6 | phenomenon. Yes, it's true. The amount of money creation with respect to the size of the economy |
| 0:47.2 | is important. But prices in dollars or in euros or yen or rupees are signals from a living system that has thresholds, pulses, delays, and feedbacks. |
| 1:03.6 | Money acts as a current in an ocean of energy, materials, technology, leverage, ecosystems, and social contracts. Actually, ultimately, money is a |
| 1:14.8 | social contract, relying on trust and shared values and one that will be increasingly stressed |
| 1:21.1 | as a great simplification approaches. There is a wider boundary framework of how all these economic factors interrelate, |
| 1:30.6 | and I've come up with seven major drivers of either inflationary or deflationary impacts on prices. |
| 1:39.1 | I'm Let's start with some definitions. |
| 1:52.4 | Firstly, what is money? |
| 1:53.9 | The textbooks say money accomplishes three things. |
| 1:57.8 | First, a unit of account. |
| 1:59.6 | Second, a medium of exchange. And third, a store of value. All true. But biophysically, there's also four, a claim on energy. And five, a claim that externalizes the ecosystem cost and impacts like pollution, deforestation, soil depletion, |
| 2:20.3 | species, extinctions, etc. Every dollar, when it's spent, effectively hires an invisible energy |
| 2:28.3 | worker that leaves a footprint. This should immediately set you to thinking about how much money can there realistically |
| 2:37.3 | be that is spendable in a functioning world? And other questions, probably. Okay, so what impacts |
| 2:45.8 | the prices of things in our world? Let's start with the obvious driver of inflation. Money creation. |
| 2:54.8 | When commercial banks issue new loans, they create new deposit money. When central banks and |
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