Is inflation good or bad? What causes it?
If inflation causes a gap between the rich and poor is this bad? I heard it has been the cause of the fall of empires. And what causes inflation? Is it caused by greedy people who want people to pay more?
Answer:
As pointed out, an oversupply of money causes inflation. The primary cause is government deficit spending. Since year 2000, the GDP increased about $5 trillion. During the same period, about $7 trillion additional $s was put into circulation by deficit spending. This diluted the value of the dollar, which is inflation.
It is a bad thing since a penny is now worth about 4 cents for the metal content. Inflation was so bad in pre-WWII Germany that the paper in their paper money was worth more that the currency denomination. It's a huge problem when the material used to make the currency is worth more than the currency.
the supply and demand method. it could be good or bad.. either way, it depends which way it goes.
Inflation is caused by to much money being injected into the economy.
It was done recently in the USA when mortgage lenders, on orders from higher authorities, made new housing loans available to qualified {?} buyers.
Governments are to blame!
Where I live the value of property more than doubled because the local government assessed property values @ more than double the previous year to squeeze more property taxes out of property owners.
Yes it's bad, because it means people have to somehow come up with more dollars to buy things that cost more.
Inflation basically explains the rate of increase in prices. Contrary to what is thought small inflation rates (0.5-2%) is healthy because it encourages businessess to enter the market by providing them with a profit incentive. However, when it gets higher thats what creates problems because it causes the purchasing power of the people to diminsh like the hyperinflation crisis in Germany.
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Answer:
As pointed out, an oversupply of money causes inflation. The primary cause is government deficit spending. Since year 2000, the GDP increased about $5 trillion. During the same period, about $7 trillion additional $s was put into circulation by deficit spending. This diluted the value of the dollar, which is inflation.
It is a bad thing since a penny is now worth about 4 cents for the metal content. Inflation was so bad in pre-WWII Germany that the paper in their paper money was worth more that the currency denomination. It's a huge problem when the material used to make the currency is worth more than the currency.
the supply and demand method. it could be good or bad.. either way, it depends which way it goes.
Inflation is caused by to much money being injected into the economy.
It was done recently in the USA when mortgage lenders, on orders from higher authorities, made new housing loans available to qualified {?} buyers.
Governments are to blame!
Where I live the value of property more than doubled because the local government assessed property values @ more than double the previous year to squeeze more property taxes out of property owners.
Yes it's bad, because it means people have to somehow come up with more dollars to buy things that cost more.
Inflation basically explains the rate of increase in prices. Contrary to what is thought small inflation rates (0.5-2%) is healthy because it encourages businessess to enter the market by providing them with a profit incentive. However, when it gets higher thats what creates problems because it causes the purchasing power of the people to diminsh like the hyperinflation crisis in Germany.
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