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Saturday, March 08, 2008

Evil Inflation : the definition, the cause, how to fight.

We’ll be expecting the government will increase the price of petrol after the 2008 election due to unbearable high price of crude oils. With the consumer goods’ price was already taken its place to a higher level, we feel that the world is unfair and we wonder how these can happen.

What is inflation?
According to; 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.

To me, inflation is a significant rising in price of items I usually use, buy, and consume. These items are the needful things where I use it to survive or to continue my lifestyle. Even if the price is high, I still need to buy it.

This video can actually tells you what inflation is.

What cause inflation?
+A rise in production costs or raw materials. e.g. Crude oil prices.
+Federal Taxes on certain consumer product. E.g. Cigarettes
+International lending and national debts.

How to kick out inflation?
++Save some money.
++Spend less than you earn.
++Consider substitute items. The best example I can give is replacing regular petrol tank into natural gas tank. It is reasonably cheap and gives you more miles to your car.

What’s next after inflation?
Hyperinflation is when the government print out money paper excessively in order to satisfy the government and private spending. Example; They print out three zero digits on the RM100 paper note while it’s truth value decreasing.

And the countries had been infected by it a long time ago:
Click here for full list of hyperinflation around the world.

See this video of 1200% inflation in Zimbabwe for the good example of hyperinflation.

How do people define inflation.
It’s hard to believe that inflation has hits most of the country. I hope we could pray and believe everything going to be alright.
+ Party’s over: uppity Chinese and Indian workers spur inflation
+ Inflation is Rearing its Ugly Head Again
+ Inflation is an important issue for everyone in New Zealand

How do people feel about inflation around the world?
I put the keyword ‘as inflation’ and here’s what I’ve found
+ Drug prices for elderly rise twice as much as inflation
+ As inflation subsides, disinflation seamlessly fades into deflation.
+ Gold and oil soar as inflation fears grow
+ Cameroon crisis continues as inflation surges

Inflation really knocks me off and whenever the government announce the fuel price increment, I get frustrated and curse the sky.

Can you suggest what we can do to fight inflation?


Nadlique 3/10/2008 2:13 PM  

Inflation is bad in a sense, but having a disinflation (negative inflation figure) is much worse.

So, the best option would be to have low and controlled inflation rates.

Nobody can deny that in the efforts of achieving a developed economy, inflation is a by-product.

Tabuxander 3/12/2008 9:46 PM  

ok. I agree with you, nadlique. We can see a good example of what has happened with the economy of japan in 90s.

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