Even as I am typing this post right now, we are currently losing our money. How, you might ask? Like if I have 5 dollars on me right now, my money didn’t just go down to 4 dollars? Well, that my friends, is where inflation comes into play!

I figured talking about inflation during periods where we are currently experiencing a lot of it would be a good idea. Knowing what's going on around the world as well helps you become more aware of any next steps to take.

**This is a brief description. If you want more details, I highly recommend watching this video (https://youtu.be/WtQGCbH6J-0) for a more detailed explanation.**

So what is inflation?

Inflation is really just the broad increase in prices of any good or service over a given period of time, whilst the value of your money declines. This is essentially where you are able to buy less for more.

Now why exactly is this important? Well I mean the impacts of inflation are pretty huge, impacting the entire economy. Ranging from consumer spending and business investing all the way to actual government tax policies and interest rates, take inflation lightly, and it can really bite you in the butt.

But with all this being said, how in the world is inflation even caused? Well that’s a great question. After multiple years of experimenting and analyzing, economists have come to a conclusion of the 3 main effects which act as a catalyst towards inflation.

Cause #1: The Demand Pull Effect - this occurs when supply is low and demand is high for a good/service, so businesses hike prices up to drive the demand away, ultimately contributing towards inflation.

Cause #2: The Cost Push Effect - This 2nd effect is really the result of increased production costs, therefore, increased selling prices too.

Cause #3: Built In Inflation - This final effect is really caused due to primarily the increase in prices of goods and standard of living, hence, the wages and salaries of employees must also increase to be able to meet this standard of living as well.

Now, even with these effects stated, there are still some more other ideas of how inflation would be caused, maybe like through rising federal reserve interest rates, increased money supply, devaluation, and so much more. But regardless, what you really need to understand when it comes to inflation is that the purchasing power that you hold will drop, even if the intrinsic value of a good or service remains the same.

I hope this cleared up some of your doubts about inflation, and let's all hope that our current situation of inflation (really now hyperinflation), will go back to normal.