Really - What is inflation?

When you spend the same amount for a smaller box of food or a smaller candy bar or a smaller can of soda, that is inflation. When you purchased anything today that cost less a few years back, that is inflation.

Ever watch an old movie and see a menu for food with something like this:

Egg Salad sandwich, pickle and fries  25¢ - In a large city this would cost $5

Hot dog and fries plus a soda 25¢ - In a large city this would cost $5

1949 Plymouth  $250 - OK this would be an antique and worth more as an antique.

3 Bedroom, 2 bathroom home - new construction $500   (in 1947) Same home today costs $325,000

16 OZ Largest Chocolate Candy Bar  5¢  Today it's 14 OZ and cost $1.99

Movies cost 25¢ in 1947 and you saw 2 full length movies. In 1960 the cost was $1.25.
In 1985 the cost was $5.25.  In 2012 the cost is $12.00 with only one full length movie.

These are examples of inflation. It creeps up on you but it is a steady creep.

Now let's look at inflation in another way. Assume you have a savings account with $1000 in it.
And today you could buy $1000 worth of merchandise. In one year from now, that $1000 will only be able to buy $965 worth of the same merchandise. That is inflation. If you take this example out for five years, that $1000 will only be able to purchase about $825 worth of the same merchandise.

What is inflation? It is a decreasing in value of your money. With inflation, a dollar today will be worth less tomorrow. Some people call inflation an hidden tax.

Are the retailers making more money with these higher prices? NO! Their costs are going up and the money they get for their products and services will only be able to buy less each year. So where is the money going? That's why it's called a hidden tax. The money gets circulated and just disappears
in the higher costs of everything.

When inflation gets out of control, and the value of the money is dropping faster each day, that is the beginning of a complete collapse in value of that money.This has happened many times since the Roman times and the people of those countries became instantly poor no matter how much money anyone had in the bank.  That is inflation gone wild.

The USA and many of the major countries in the world are now going through increased inflation.

And that's the way I see it...
Straight Talk with Jay Clifford.