Theory 171/Inflation/Ratio lens
Pressure Is Demand Against Capacity
The claim
Inflationary pressure is set by the ratio of demand to productive capacity, so the same demand is inflationary in a constrained economy and not in an elastic one.
01Mechanism
Prices rise when demand cannot be met by supply; the ratio determines the gap.
02Prediction
Pressure should track the ratio.
03Refutation
Pressure tracking demand alone would remove capacity.