Wednesday, August 31, 2016

Greetings Infomaniacs,

I don't know why, but my subscribers don't write to me very often. I so was delighted to actually get some reader email the other day.

After Monday's issue, Jennifer H. wrote in to ask, "Can you please tell me exactly what is inflation and why does it happen?"

Inflation is a word we hear on the news almost every day, but many of us don't understand exactly what it is. The term was first used in a monetary sense to describe "an increase in the amount of money" in 1838. Today, economists argue over the definition of inflation but generally agree that it means a continued rise in prices while the value of money declines.

Enjoy!

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WHO SAID IT?
QUOTE: "The way to crush the bourgeoisie is to grind them between the millstones of taxation and inflation."

HINT: A communist revolutionary, politician, and political theorist who supporters viewed as a champion of socialism and the working class, while critics saw him as the founder of a totalitarian dictatorship responsible for mass human rights abuses.

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RANDOM TIDBITS
Inflation is a long-term, sustained rise in the general level of prices, as measured by a consumer price index. But why?

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Inflation is primarily caused by an increase in the money supply that outpaces economic growth.

Ever since industrialized nations moved away from the gold standard, the value of money is determined by the amount of currency that is in circulation. When the Federal Reserve decides to put more money into circulation at a rate higher than the economy's growth rate, the value of money can fall because of the changing public perception of the value of the underlying currency. As a result, this devaluation will force prices to rise due to the fact that each unit of currency is now worth less.

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Nations who were on the Gold Standard during the 19th century until 1914 experienced little or no inflationary trends.

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In 1971 the U.S. decoupled the value of the dollar from gold altogether. Now a U.S. dollar is only worth 12 cents of what it was worth in 1950.

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Hyperinflation is a situation where the price increases are so out of control that the concept of inflation is meaningless.

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The post-WWII hyperinflation of Hungary holds the record for the most rapid monthly inflation increase ever: 41,900,000,000,000,000 percent for July 1946, which means prices doubled every 13.5 hours.




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*** Weekly Mind-Scrambler ***
If your sock drawer has 6 black socks, 4 brown socks, 8 white socks, and 2 tan socks, how many socks would you have to pull out in the dark to be sure you had a matching pair?

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Be sure to put "Winner" in the subject line.

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WHO SAID IT?
QUOTE: "The way to crush the bourgeoisie is to grind them between the millstones of taxation and inflation."

ANSWER: Vladimir Lenin