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Inflation can cause adverse effects on the economy. For example, uncertainty about future inflation may discourage investment and saving. Fixed nominal payments unadjusted for inflation in the monetary medium of exchange as a result of the implementation of the Historical Cost Accounting model will widen the real salary gap between those with fixed payments for constant real value salaries and those with inflation-adjusted payments for constant real value salaries. High inflation may lead to shortages of goods as consumers begin hoarding them out of concern their prices will increase in the future. Economists generally agree that high rates of inflation and hyperinflation are caused by an excessive growth of the money supply.[5] Views on which factors determine moderate rates of inflation are more varied. Low or moderate inflation may be attributed to fluctuations in real demand for goods and services, or changes in available supplies such as during scarcities, as well as to growth in the money supply. The consensus view is that a sustained period of inflation is caused when money supply increases faster than the growth in productivity in the economy.[6][7] This is reflected in Milton Friedman's quote "Inflation is always and everywhere a monetary phenomenon."[8] Today, most economists favor a low steady rate of inflation.[9] Inflation has no effect on the real value of non-monetary items. The "purchasing power of non monetary items does not change in spite of variation in national currency value."[10] The task of keeping the rate of inflation low is usually given to monetary authorities who establish monetary policy. Generally today these monetary authorities are the central banks that control the size of the money supply through the setting of interest rates, through open market operations, and through the setting of banking reserve requirements.[11]
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