Quick Inflation tutorial - 1

Inflation:
Symptom - Rising prices ( usually this is considered as cause )
Cause - increase of money supply in market
Consequences of Inflation - Dont tell me u dont know yet!!
Worst case scenario - Hyperinflation

Increase in price of a certain good can happen in any of the following cases:

1. Increasing the supply of money

2. A decrease in the supply of goods and services

3. An increase in demand, i.e. population increase

The last two cases will result in increase of a particular good and not general price levels in the market.
What is generally explained by authorities as cause for inflation could be any or a combination of below listed reasons:

1. Cost-push inflation as a result of arbitrary demands of labor unions.

2. Profit-push inflation resulting from the greed of businesses raising prices.

3. Crisis-driven inflation resulting from acts of nature or weather.

These reasons are said to account for a large rise in the general price level (not just a relative rise in some prices, such as the price of oil), the economy’s output must shrink by a large percentage. In practice, “supply shock” cases are seldom large enough to account for much inflation and are typically short-lived. For example, of the 9.2 percent U.S. inflation rate in 1980 (as measured by the GDP deflator, gP = 9.2 percent), the negative growth of real GDP (due, in part, to the OPEC oil price shock of 1979–1980) accounted for only 0.2 percentage points (gy = −0.2%). [Source]

Inflation is an increase in the quantity of money and credit relative to available goods resulting in a substantial and continuing rise in the general price level, an increase in the quantity of money caused by government.

I will deal how it happens in later post.

whats in bailouts dude?

Bailout to banks everywhere...what exactly is happening and what does it mean?

Bailout, as done by US and EU countries here means helping people who do scams so large that its better to get them out of mess than admitting mistakes for allowing it to happen. Its just that!

So, now what about the common people who lost money for mistakes of bunch of casino traders? - They can protest in front of some political offices and go back home cribbing.

Will the bailout really solves something? NO, NOT AT ALL. Close to trillion dollars have been used as bailout so far, across the continents. Nothing happens because you are trying to value assets whose worth you don't know at all.

Where does govts get that money from? They print money....simple and straight. That cause inflation as more supply increases.

Is it better if not bailed out? YES! Countries might have financial problem for following couple of years, then markets will correct themselves. Its better than debasing the currency and getting into bigger trouble.

Here is the longstanding crusader against this form of corporate socialism: