💸 What Is Inflation?
Same stuff. Higher prices. But why?
Explore why your money feels like it’s shrinking — and what that really says about the economy.
🌐 Background
Inflation is when prices go up over time — and the value of money goes down. A cup of coffee that cost $1 in 1990 might cost $3.50 today. That’s inflation in action.
It’s often measured by the Consumer Price Index (CPI), which tracks the average price of a "basket" of goods like food, gas, and housing.
Analogy: Think of your money like a balloon. When inflation rises, the balloon deflates. It doesn’t disappear — but it doesn’t stretch as far as it used to.
🔍 Request
What is inflation?
- Why does everything seem to get more expensive?
- What causes inflation?
- Is inflation always bad?
- How do we measure and respond to it?
📈 Additional Info
- Causes: Inflation can result from increased demand (demand-pull), higher production costs (cost-push), or money supply expansion.
- Good vs. Bad: Mild inflation encourages spending and growth. High or unpredictable inflation erodes savings and causes instability.
- Who’s affected: Fixed-income earners and savers lose value; debtors may benefit.
- Control methods: Central banks raise interest rates to cool inflation.
Example: During the 1970s, the U.S. experienced "stagflation" — inflation with slow growth. In the 2020s, inflation surged post-COVID due to supply issues and stimulus.
❓ Inquiry
- Is 2% inflation actually healthy for the economy?
- Could deflation ever be a good thing?
- How does inflation affect rent, wages, and retirement?
- Should governments print less money or rethink how it flows?