Say Hello to Inflation

Say Hello to Inflation

What is inflation and how does it impact our daily lives? Explore our breakdown, including a short history lesson!

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What do cigarettes, prescription drugs, and landline fees have in common? They’re all on the Consumer Price Index, a list of household expenses used as a measure for changing prices over time. This is called inflation. 

The right amount of inflation is a good thing. When we think prices are going up we will buy more things now rather than later – which in turn juices the economy. When prices are decreasing, we’re more likely to wait for further price decreases. People buy less stuff which means companies produce less stuff leading to layoffs and a market surplus.  

So if inflation is good, why are people freaking out about it? Well, when things get more expensive too fast it kinda messes up the whole supply chain. Raw materials become expensive, which means the economics of a business completely change, companies need to recalculate and will slow decision making, things don’t work like they used to which causes uncertainty, and the market freaks out. This brings us to the present day.
Children playing with stacks of hyperinflated currency during the Weimar Republic, 1922
In the image above, children play with stacks of money because hyper-inflation has made them cheaper than blocks. 

The good news is that the US Dollar is the world’s currency. If anything, it has been hard for the government to produce any inflation at all because the currency is so stable. Never say never, but we’re not going 100% to crypto or stashing gold under our couches just yet.

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