Inflation is the process of losing money by purchasing money

In the conditions of the world crisis, the term "inflation", which is incomprehensible for many people, began to sound very often. This can only mean that this concept is directly related to the current state of the world economy. The term was first used in North America in the sixties of the XIX century. He denoted the process, which makes it necessary to increase the issue of paper money. After applying this term to the Americans, he migrated to Europe, where he found his application in describing the economic processes taking place in France and Britain. However, in the specialized literature this concept began to be widely used only at the beginning of the twentieth century.

Practically in each textbook one can meet the following interpretation of this term: inflation is a process of reducing the value of money (their depreciation). At the same time, the reason that caused this phenomenon is called excessive amount of money, which is in circulation and is not covered by any blessings. Undoubtedly, the growth in prices for goods and services, the accelerated growth rate of unsatisfied demand, etc., are undoubtedly attributed to the characteristic results pursued by this process. At the same time, all channels of circulation of money are overflowed with an excess of paper denominations, and the number of manufactured goods does not increase.

Emission of currency in the conditions of economic recession can be the reason of occurrence of such phenomenon, as inflation. The definition of this process can have several options, the meaning of which is reduced to one: the depreciation of the money supply and the rapid rise in prices. At the same time, to ensure that paper payment instruments retain their value, their backing with the gold and currency reserves of the issuing country is necessary. In fact, this is not always the case. Therefore, there is an imbalance between the value of money and their quantity.

Inflation is a process that is negatively perceived all over the world, which can destroy even a well-established and stable economy. At the same time, if the rate of its growth at the level of 6% can still be turned even in a positive direction, then the overtaken mark of 10% this economic phenomenon bears harmful and, sometimes, even devastating consequences for any state.

Inflation factors that have a direct impact on it are divided into external and internal factors. The latter category includes monetary and, accordingly, non-monetary reasons. Monetary factors include the budget deficit, the continuous growth of public domestic debt, and others. As it was said above, an inordinate issue of paper payment means plays an enormous role. Non-monetary factors include the emergence of credit expansion, imbalance and imbalances in production, the process of monopolization and others.

External causes are caused by the situation in the world economy. These include structural crises - raw materials, energy and others, as well as illegal operations for the export of gold, etc.

Inflation is the process of a drop in the purchasing power of money, which can be divided into species, depending on its pace, mode of appearance, and forms of manifestation.