Inflation

Inflation, at the very core, is the rate at which the price level in an economy increases. It can also be called the rate at which the purchasing power of individuals is falling: as prices increase, less and less can be bought with each dollar. There are many factors that can cause inflation to increase, but two of the major ones are excessive money supply and reckless government spending.

Inflation is not a problem if it is low; but, once it escalates, it causes severe economic problems. To control inflation, central banks use different tools such as interest rates. In the U.S., the Federal Reserve targets inflation rate in the U.S. economy to be between two percent and three percent.

The inflation figures in the U.S. are reported by the Bureau of Labor Statistics (BLS) each month, for the previous month.

Since the financial crisis of 2008 and 2009, inflation in the U.S. economy has been very low. In 2013, prices increased by 1.5%, which was well below the Federal Reserve’s target. But, over the past few years, the central bank has printed a significant amount of money to boost the economy. The money supply, as a result, has substantially increased. In addition to this, the U.S. government has also spent, continuing to incur budget deficits year-over-year. Going forward, this could mean soaring inflation.

U.S. Economic Outlook for 2015: Economy Strong but Markets Unstable

By Wednesday, April 1, 2015

Economic Picture for 2015 Not RosyStrong Economic Data Points to Growth in 2015?
As 2014 winds down, many investors are wondering what the economic outlook for 2015… Read More will be. If you look at the U.S. economic data that’s been trickling in, 2015 looks like it could be a very strong year.
The U.S. announced strong third-quarter gross domestic product (GDP) growth of 3.9%

How I Proved a Gold Bear Wrong About Gold Prices in 2015

By Thursday, March 19, 2015

Bullish gold outlookRecently, I had an interesting conversation with my friend about the current situation surrounding gold prices. He argued gold investments were a drain on your capital; I argued that gold is the next big trade.
My Friend’s Bearish Gold Outlook
“How can you be so bullish on gold?” asked a friend of mine I met with over the weekend…. Read More

Why Ugly Inflation Is Showing Up Everywhere Except in CPI Numbers

By Monday, March 9, 2015

Inflation is Showing Up EverywhereAccording to the U.S. Bureau of Labor Statistics (BLS), between February 2014 and January 2015, overall prices in the U.S. economy declined by 0.1%. (Source: Bureau of Labor Statistics, last accessed March 5, 2015.) In 2014, inflation ran at the slowest pace since 2008.
When I look at these statistics, I can’t help but ask myself, h… Read More

Survey Shows Real Inflation Running at About 5%

By Wednesday, December 3, 2014

Survey Shows Real InflationIf you listen to mainstream economists, they will have you convinced prices in the U.S. economy aren’t rising fast enough. Some say we are headed towards a period of deflation. But the reality of the matter is that inflation in this economy is running rampant.
According to the Bureau of Labor Statistics, what you could buy for $1.00 i… Read More

Two Major Concerns About Overvalued Stock Market Prices

By Monday, November 17, 2014

Stock Market 60 OvervaluedThe amount of money investors are borrowing to buy stocks is skyrocketing.
In September of this year, margin debt on the New York Stock Exchange (NYSE) stood at $483.87 billion—a new record-high. When the stock market was forming a top in 2007, margin debt was at a “then” record-high of $329.51 billion. Margin debt on the NYSE is… Read More

×