Knowing Your Flations – Part I: Inflation

The “Flations” consist of two very common terms: Inflation and Deflation. But within this three-part series, Stagflation will also be discussed.  An understanding of each of these terms is important to not only the financial markets but to all individuals as well.

When the word Inflation is used, one’s first reaction is that prices are going up. And that is a correct thought pattern considering the definition of Inflation is just that – an overall upward swing in prices on the goods and services purchased by consumers.

The cause of inflation is generally an increase in the monetary supply which will over time limit the purchasing power of the consumer as the value of the currency used will fall or weaken and thus people will be unable to buy the same amount this week as they did last week, month or year.

Government policies and procedures are set up to combat drastic fluctuations in inflation and usually in the U.S. the inflation rate is between 2 and 3 %.

Stay tuned for Part II – Deflation.

All the Best,
The Capital Corp Team


Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out /  Change )

Google photo

You are commenting using your Google account. Log Out /  Change )

Twitter picture

You are commenting using your Twitter account. Log Out /  Change )

Facebook photo

You are commenting using your Facebook account. Log Out /  Change )

Connecting to %s