What is Inflation?

Economists constantly refer to inflation and tend to suggest it is a Very Bad Thing. But why exactly, where does it come from and what could one do to tame it?

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Music

[ChristopherAbelman]

Stashed away cash for a rainy day, but with inflation pouring down, it feels more like a leaky bucket. Saving for retirement seems impossible if my money keeps losing value faster than I can earn it.

[NicholasBall]

The system is failing as a result of both government and federal policy. In the next days, the banking crisis would have to be epic and gigantic for the FED to decide not to raise interest rates. This won't happen; an increase and a crash are coming. There will be more negative portfolios this 2nd half of 2024 with markets tumbling, soaring inflation, and banks going out of business. My concern is how can the rapid interest-rate hike be of favor to a value investor, or is it better avoiding stocks for a while?

[dogzer]

Inflation is treated like a technical term for economics... but it's a naturally occurring event in everything we do.

....Like when a friend asks you a favor and you do it gladly, but then your friend starts assuming you never have anything better to do and asks too many favors, so you have to VALUE your time more, and saying "no" every now and then.
...Or like people that compliment everything too much, even if it's not compliment-worthy, that person's compliments start losing value, aka deflation.

Inflation exist because it's part of nature, not a part of money. Economics are not money concepts, they're life concepts. Money is nothing but a universal intermediary, a tool that unites disciplines.

[syluar]

That feeling when you're not sure if it's School of Life or Kurzgesagt videos you've tuned in to.

[rishikkeshsuresh]

In Venezuela people be like:
*Im finally a billionaire, now i can buy an egg*

A cold war is going on below.

[LucysCorsetry]

8 minutes and I'm immediately prompted to invest in property or gold instead of simply holding onto cash.

[joesphcu]

The way I see it this recession most likely has an external cause. The United States is losing influence as a federal currency for the first time in decades. They don't have any more economies to utilize to control their inflation, and less money is being spent on stock and oil trading than previously. They all lend credence to the hypothesis that a new multilateral world order may be in the works.

[carntspell]

Well in 8 minutes you covered what my high school economics teacher couldn't do in 2 years. He preferred to tell us of how well his investment properties were doing, bless him.

[mattpredictsofm.]

Inflation is far more harmful to individuals than a collapsing stock or property market because it
directly affects people's cost of living, which they immediately feel. It is not surprising that the
current market sentiment is extremely pessimistic. In today's economy, assistance is critical if we are to survive.

[joseangel]

Thanks! Now I'm even more scared of the future.

[AdelinaLanoszka]

A powerful coincidence is preparing in the US. Expansion, bank breakdown, serious dry season in the horticultural belt, downturn, real estate market decline, bank emergency, food deficiencies, diesel fuel and warming oil deficiencies, child recipe deficiencies, accessible car deficiencies and costs, the cost of residing place. It's all approaching together and it could prompt a genuine calamity towards the finish of this current year (or sooner). With expansion at present at around 6%, my essential concern is the way to expand my reserve funds/retirement asset of about $300k which has been exposed target since perpetually with zero to no increases.

[DeadCanDance]

“learning to live with inflation belongs to wisdom” lol say that to venezuelans and their 1.000.000% inflation growth per month

[Discovery_and_Change]

1:31 Cost-push inflation (where the costs of businesses rise, and businesses then raise their prices)
Cost of business could rise because materials are more expensive, because workers are asking for more money, or because rent is higher

2:22 Demand inflation (when too many people want something that there's not enough of)
This increase in demand can be caused by people now having more money to spend (whether it be through better saving, earning, or stimulus checks ;-)

3:33 Governments printing money (and the amount of money in circulation increases, causing the worth of money to drop)

6:23 Inflation is bad for savings (causes savings to be worth less)
6:37 Keeping inflation low is a reward to the prudent (people who saved) and helps with long-term planning because we'd know what our money will be worth in the future

[hermanramos]

We read news in the media that doom and gloom is coming and we just accept it, doom and gloom doesn’t always have to be coming, I’ve read numerous success stories of people that are pulling off tremendous gains of up to $250K within weeks in this crazy market and I just want to learn how to achieve such figures.

[TheManifoldCuriosity]

This is helpful, now I would really love a whole series on economics. I can get my head around philosophy and politics with relative ease but most financial ideas elude me. I mean, what even is currency??
(that sounds kind of philosophical now that I think about it)

[J]

Because production steadily becomes more efficient, products become cheaper. The undisturbed monetary status is deflation. This is a good thing because we all slowly get richer. There is no need to invest your money in the financial markets (with all the risks involved) in order to protect yourself against inflation or to save for your pension. Inflation is always the consequence of some form of interference, usually by governments; be it by importing huge amounts of gold and silver from South America as the Spanish did, or be it through economic policy as we currently have. 

If the amount of money in circulation is constant then the generic price level can only rise when less goods are around that need to be priced, meaning when the economy falls. When the economy stays flat, some prices can rise (due to shortages) but others must fall. It is not possible to grow an economy by increasing the amount of money in circulation. If that were possible we would all be very rich and poverty would no longer exist. What happens in the mentioned 'window of opportunity' is that new money is spread unevenly through society. Those who receive it first, banks and governments, can profit of the full purchasing power of it. Those who receive it last, people on fixed income like pensioners or welfare receivers, are the losers of this great redistribution scheme. It's an injustice.

And, as already has been stated, most money is created in the form of credit through fractional reserve banking. This is also the cause of the so called boom-bust cycle or credit cycle as all the credit created has to go somewhere, real estate, government bonds or Internet shares. After a while the bubble inevitably has to burst; the loans cannot be paid back, companies go bankrupt, banks get in trouble and the total amount of money and credit in circulation drops. This is what we call an economic crisis. It is man made and the consequence of the effort to manage the economy.

[aishawf]

How can a video on Inflation be soothing??? 🤔😊🤔
Clearly and simply explained- thank you!

[simplyshama]

Love this! If you could do videos on stock markets, how they determine interest rates and currency exchange rates that would be great. I never understand it and most people I ask dont either. Like why can you get a better exchange rate at one place in comparison to going to another. How does the economy even work!? These are things that, if you didnt take economics in school, you may never really know.

[Raw]

There is no dark corner for doubt or ignorance to gnaw at us, so long as The School of Life bestows it's many lessons to us in clear and comforting ways.

[liamnoah]

Given the high inflation, the use of coupons is more widespread than ever and many people rely on them not only for the purchase of food but also
for clothing and much more. The transition to the 8112 digital coupon format is imminent. Qples by Fobi is the only platform able to provide
physical/digital coupons anywhere in the world redeemable in real time! This is very valuable for the big CPG brands as they allow them to improve
their Roi but above all customer loyalty, which has proven to change brands if the situation is advantageous.
McDonalds, burger King and many other brands could use Qples by fobi coupons to increase customer loyalty, Roi and improve their margins.
Given the high inflation that has led to the reduction in consumer purchasing power, CPGs are looking for new ways to attract customers.
I think the arrival of digital coupons and the transition to 8112 has been accelerated by all of this.
The decline in margins and profits that we are witnessing of many tech companies, once considered leaders,
confirm the shift of the consumer in search of better opportunities and bargains offered by coupons.