Financial Knowledge SharingNo. 1: Inflation

Under the condition of currency circulation, the actual money demand is less than the money supply, that is, the actual purchasing power is greater than the output supply, which leads to the devaluation of the currency and the maintenance of prices for a period of time.

The phenomenon of continuous and general rise.

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, printing money continuously can reduce the debt and make the country run normally.

Enhance class mobility

In the 1990s, when the value of currency declined, the older generation did not enjoy the benefits, and the rising labor price gave young people the opportunity to accumulate wealth through labor, which improved the intergenerational relationship.

Mobility to avoid social class lock-in.

The disadvantages of inflation

1 makes it impossible for people to accumulate wealth by cash deposits. The more you save, the more you lose. Saving for the elderly has become a joke. Only loans can accumulate wealth, and the more loans, the more anti-inflation. For a long time, no one wanted to save, and the national debt model was opened.

When inflation is very high, monetary credit will be seriously lost, the country will face credit bankruptcy, the purchasing power of finance will be gone, and the country will fall into bankruptcy crisis.