Inflation

Inflation is the rate at which prices for goods and services are rising. The purchasing power of money declines as inflation rises. Inflation becomes harmful to an economy when it causes the average levels of prices to increase substantially over time or if it causes a decrease in the demand for goods and services due to higher prices, which results in lower output by producers. Inflation can become very problematic if it reaches hyperinflationary levels, where the general level of prices rise so quickly that no one has any incentive to buy because they know everything will be more expensive tomorrow. In this case, economic growth decreases dramatically and unemployment increases.

Inflation happens naturally after wars or major conflicts or simply as an effect of a growing population: either way it is always around us and affecting us in some way shape or form. 

The consumer price index (CPI) is a good indication of the inflation rate. Inflation is a complex phenomenon that involves a lot of factors, but one concept everyone can understand is that it means

Inflation is good for those holding assets in cash or checking accounts as the value of their assets actually go up with time as prices increase. Inflation also benefits borrowers as they are able to pay back their loans from relatively higher earnings. In fact inflation encourages economic growth by stimulating investment and promoting employment.

In short, Inflation is a tool used by governments to stimulate growth and establish interdependence between nations. In theory, many people would think that a country's currency will be worth less if its supply increases however this is not true at all what matters most is whether the currency is desirable or not. Put it this way, would you rather have 100 USD or the equivalent in Cuban Peso? In this case, the 100 USD would be worth more as it is a stable currency and Cuban Pesos are not. Inflation is simply an increase in the general price level within an economy over time.

In conclusion Inflation cannot be stopped as humanity continues to innovate thus increasing the demand for money thus creating inflation over time. Inflation also benefits the people who understand what it is, people who understand how to use it, people who own assets like we spoke about earlier, inflation makes asset prices go up, the purchasing power of your re-payments on your loan loan become less (good thing). People who simply save their money in a savings account (currently just above 0% interest) are losing purchasing power year after year since inflation is 2-4% per year.