Can someone explain Inflation? The dumbed down version

[morteduzionism]

I look up the definition probably 4 times a year...I still don't know what it is.

Please explain it as if you were talking to a...hmmm...6 yo retarded boy who has been repeatedly dropped on his head and only attended public schools in the US.

[The Knight 2100]

Inflation is a general increase in prices, basically the cost of everything goes up. Inflation is why whenever you see prices from the 50's things only cost a nickel while today they would cost a few dollars.

[Rush Limbaugh]

Inflation is what happens when you let a private bank print and control your money. Down with the Fed

[morteduzionism]

Inflation is a general increase in prices, basically the cost of everything goes up. Inflation is why whenever you see prices from the 50's things only cost a nickel while today they would cost a few dollars.

hmm, so...is inflation across the board? What I mean is, let's say $1/US could buy: 1 loaf of bread; jar of peanut butter; jar of jelly; a cup of juice($0.25/US x 4 = $1.00/US)

Inflation would mean what? That the price of one item goes up or the prices of all 4 items? Or combinations, sometimes one item might increase in price while others stay the same?

[The Knight 2100]

hmm, so...is inflation across the board? What I mean is, let's say $1/US could buy: 1 loaf of bread; jar of peanut butter; jar of jelly; a cup of juice($0.25/US x 4 = $1.00/US)

Inflation would mean what? That the price of one item goes up or the prices of all 4 items? Or combinations, sometimes one item might increase in price while others stay the same?

Inflation would mean that the price of all of the items goes up.

[Mig el Pig]

hmm, so...is inflation across the board? What I mean is, let's say $1/US could buy: 1 loaf of bread; jar of peanut butter; jar of jelly; a cup of juice($0.25/US x 4 = $1.00/US)

Inflation would mean what? That the price of one item goes up or the prices of all 4 items? Or combinations, sometimes one item might increase in price while others stay the same?

Inflation can be triggered by one of these items going up which will result in all others going up in price as well eventually.

[Farnan]

I'll explain inflation this way:

Say that the average person had $100. If this was the case $10 would be a lot of money.

Now, lets say that the average person has $1,000,000. In that case $10 would be a very little amount of money.

Either case $10 is the same, but how much it is worth is different depending on how much the average person has. So that $10 in the first example may buy you a house, but in the second example it may be barely enough to buy you a candy bar.

[Legio XX]

Inflation is not defined as the increase in prices but as the increase in the supply of money that causes the increase in prices.

A definition:

"In inflation everything gets more valuable except the money itself"

or a more advanced explanation:

"A persistent increase in the level of consumer prices or a persistent decline in the purchasing power of money, caused by an increase in available currency and credit beyond the proportion of available goods and services."

[morteduzionism]

Inflation is not defined as the increase in prices but as the increase in the supply of money that causes the increase in prices.

A definition:

"In inflation everything gets more valuable except the money itself"

or a more advanced explanation:

"A persistent increase in the level of consumer prices or a persistent decline in the purchasing power of money, caused by an increase in available currency and credit beyond the proportion of available goods and services."

ok......i'd hate to see how you explain something in the non dumbed down version...lol

[Big War Bird]

Inflation is also caused by relative increased scarcity of goods. If more people demand an item whose supply is fixed then the price will rise.

[Rush Limbaugh]

Inflation is also caused by relative increased scarcity of goods. If more people demand an item whose supply is fixed then the price will rise.

More like an overabundance of worthless money is the cause. Printing money backed by nothing like we do.

[Aristophanes]

More like an overabundance of worthless money is the cause. Printing money backed by nothing like we do.

Too much money chasing too few goods, as both of you were saying.

When Rush says 'printing money' he really means buying back bonds from large banks, thereby increasing large bank cash reserves and allowing them lend out in multiples of the new reserves created.

[Rush Limbaugh]

When Rush says 'printing money' he really means buying back bonds from large banks, thereby increasing large bank cash reserves and allowing them lend out in multiples of the new reserves created.

Thats part of it. But the Fed also prints new money and charges the Government for it. Actually the lend it to the government and then use the income tax to collect the interest on the loan. Pretty good scheme when it cost them like 2 cents to print a 100 dollar bill and collect interest on the 100 dollars not the 2 cents. In fact now they dont even print money many times but just move digits in accounts around. The Fed is a private banking cabal that is the real source of power in the US.

[Blau&Gruen]

The Fed is a private banking cabal that is the real source of power in the US.

Is the Fed different in that respect to other central banks, e.g. the EU central bank, the British, the German or the Chinese?

[Woad-Warrier]

Inflation is basically when you've got too much money in the system.

[Legio XX]

Inflation is basically when you've got too much money in the system.

Couldn't have said it better myself!

[Che]

So basically by Inflation you mean, the value of the money decreases?

[Rush Limbaugh]

That about says it all. You get less bang for your buck.

[Che]

Oh okay, I get it. Thank you.