Financial knowledge sharing: Inflation

What is inflation?

Under currency circulation conditions, a period of currency depreciation caused by the fact that the actual demand for money is less than the money supply, that is, the actual purchasing power is greater than the output supply. Prices have been rising continuously and generally over a period of time.

Features:

Inflation is structural

Inflation is long-term

Inflation is compound interest

The benefits of inflation

Inflation can offset debt

When the national deficit is too high, continuous printing of money can shrink the debt and allow the country to operate normally< /p>

Improving class mobility

With the decline in the value of money in the 1980s, the older generation has been unable to enjoy its gains. The rising labor prices have given young people the opportunity to accumulate wealth through labor, improving the generation

International mobility avoids social class lock-in.

Disadvantages of inflation

1 People cannot accumulate wealth by relying on cash deposits. The more deposits, the more losses they will suffer. Saving for life and saving for retirement has become a joke; only loans can accumulate wealth, and the more loans you have, the more you will suffer. The more resistant to inflation. In the long run, no one will be willing to save, and the nation will be in debt.

2 When inflation becomes very high very quickly, monetary credit will be severely lost, and the country will face credit bankruptcy, the fiscal purchasing power will be gone, and the country will fall into a bankruptcy crisis.