Ask someone why prices rise and you'll usually get a shrug: that's just how it is. Inflation gets treated like weather – an impersonal force we adapt to but don't cause. Even central banks explain it that way. Read their explainers and you'll find "increased demand" and "rising costs", as if prices simply lift themselves by their own bootstraps.
But that explanation quietly skips a question: where does the money for all that increased demand come from?
The word "inflation" originally meant the inflation of the money supply. Rising prices weren't the inflation – they were its consequence. Somewhere along the way the definition migrated from cause to symptom, and with it went the sense that anything in particular was being done. If inflation just is rising prices, it's nobody's doing – like weather. If inflation is the expansion of money, it's a policy – something chosen, adjustable, and fair to question like any other policy.
Milton Friedman – no radical – put it plainly: sustained inflation is always and everywhere a monetary phenomenon. A supply shock can lift the price level once. But prices climbing year after year after year, compounding without end, requires that the amount of money grows faster than the amount of things to buy. Continuously.
Here is the part rarely said out loud, though the Bank of England spelled it out in a 2014 paper anyone can read: commercial banks create money when they lend. A new loan is not someone else's savings passed along. It's a new deposit, conjured at the moment of signing. This is what fractional-reserve banking means in practice: most of the money in existence is bank credit, and the money supply expands with every net new loan.
That's why the broad money supply – M2 – is a number worth watching. Norway's M2 has grown around 6–7% per year for decades – and to be clear, that's not Norway misbehaving; it's entirely typical of Western economies, and the US and eurozone have at times printed considerably faster. That's rather the point: roughly triple the official 2% inflation target is simply what normal looks like under the current system. The gap between those numbers doesn't vanish. It flows into the prices of the things CPI is poor at capturing – houses, stocks, everything you'd actually want to own.
If ordinary market forces were the whole story, prices would fall about as often as they rise – productivity keeps making things cheaper, after all. And historically they did: under the gold standard, decades of gentle price decline were normal, because money couldn't be expanded at will. The modern one-way ratchet, where the CPI essentially never falls, is historically unusual. It began when money became elastic.
The 2% target isn't a conspiracy; it's a design choice with real arguments behind it. Nobody accepts a nominal pay cut, so a little inflation lets real wages adjust quietly when they must. And a central bank needs inflation above zero to have interest-rate room to cut in a crisis.
But notice what both arguments share: they work because you don't notice. A real wage cut delivered through inflation goes down easier than an honest one precisely because it's invisible. That is the polite term for it – economists call it money illusion. A system that requires its own imperceptibility to function deserves, at minimum, to be perceived. And a system that softens every downturn by keeping unprofitable firms and bad investments alive also blunts the signal a market needs to reallocate – some of the "stability" is deferral, not resolution.
None of this means your savings are doomed or that crisis is imminent. It means one thing: the unit you measure your wealth in is not neutral. A gain of 40% over a decade sounds like success – until you price it in gold, or against the growth of the money supply itself, and find that much of it was the yardstick shrinking rather than your wealth growing.
That's the entire purpose of this tool. Not financial advice – a second ruler. Measure your investment in kroner, then in inflation-adjusted kroner, then in M2, then in gold. Watch the number fall with each honest step. Then decide for yourself how much of your "gain" was real.
Data from SSB, Norges Bank, the World Bank, and FRED. See the FAQ and Disclaimer for methodology and caveats.