What is Inflation and How You Can Protect Yourself

In economic terms, inflation is the decrease in purchasing power—or value—of money. It’s generally measured as an increase in the price of goods and services.

How Do We Measure Inflation?

Since inflation affects the entire economy, we need to collect data across the entire economy in order to find and measure inflation.

What Are Historical Inflation Rates?

The BLS has been measuring CPI every year since 1913, so we have accurate inflation dating back to over a century ago. The historical average inflation in the United States is 3.2% per year.

What Causes Inflation?

Inflation is caused by an increase in the money supply in an economy.

Three popular mechanisms for explaining inflation.

1) Demand-Pull Inflation 2) Cost-Push Inflation 3) Built-In Inflation

Why is Inflation Bad?

For starters, inflation reduces the average person’s spending power.

Examples of Recent Inflation and Potential Future Inflation

- Coffee - Cars - Gasoline

How to Protect Against Inflation?

- Keep Minimal Money in Cash - Invest in Stocks - Invest in TIPS - Gold, Bitcoin, & More

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