Simply put, inflation is a rise in prices which equates to a decline in your purchasing power of goods and services over time. In the US the most commonly used indexes to track inflation are the Consumer Price Index and the Wholesale Price Index. Inflation occurs because a country’s money supply is being increased. This occurs either by printing new notes or coins, legally devaluing the legal tender currency or by loaning new money into existence as reserve account credits through the banking system by simultaneously purchasing government bonds from banks on the secondary market of which this is the most common method. Inflation can be seen as both positive or negative depending on the view point. Inflation tends to help the rich get richer because they own assets like real estate that appreciate significantly with inflation. The poor tend to get poorer because they have fewer dollars chasing more expensive goods. I’m Stewart Brown, a licensed Mortgage Loan Originator in Palm Springs, California here to simply topics in Real Estate and Mortgage Lending. Please, like, share, follow and subscribe!
