Why does a more productive economy lead to inflation?
I am sure the answer is obvious, but I am running on no sleep, and also am stupid.
More productive economy = more goods produced per dollar in existence. More goods produced per dollar should mean there is DEFLATION, as a given dollar can buy more goods now.
Also, I know we don't have a stable money base, so this is not exact. But why is it that a productive economy bumps up inflation while a recession brings along deflation? Is it because credit shrinks?