I recently answered this question on Quora. And I thought I would share an expanded answer with you as well. Whenever a question starts with an assumption you need to examine whether that assumption is in actuality true. If the assumption is vague enough it can be fairly difficult to determine and we might be tempted to go with the basic assumption. In this case, the assumption is that "everything" "big" is increasing in price faster than average. We have no clue what he means by "everything" (I'm sure he isn't being literal) and what does he mean by "big"? Large as in houses, and cars, or expensive like Yachts and Lamborghinis, or things that are a large portion of the average person's … [Read more...]
September Inflation Virtually Unchanged
The U.S. Bureau of Labor Statistics (BLS) released its September Inflation report on October 10th, 2019, for the 12 months through the end of September 2019. Annual Inflation is Down Very Slightly Annual inflation in September was 1.71% virtually unchanged from August's 1.75%. Inflation has been in a narrow range throughout 2019. 1.79% in May, 1.81% in July, 1.65% in June, peaking at 2.00% in April. Inflation peaked at 2.95% in July 2018. The CPI-U index in September was 256.759 up from 256.558 in August. Monthly Inflation for September was 0.08%, August was -0.01%, July was 0.17%, June was virtually zero at 0.02%, May was 0.21%, April was 0.53%, March was 0.56%. … [Read more...]
How Does Inflation Affect Businesses?
The fallout from inflation doesn’t always receive a balanced, informed portrayal from the media. This is somewhat understandable since, unless inflation makes a drastic move, its slow steady erosion of purchasing power is not considered newsworthy. However, as with most economic forces, not everyone “loses” when inflation boosts the everyday cost of living. Inflation can actually either benefit or destroy American businesses, and individual preparation for its eventual, inevitable impact often decides how detrimental or beneficial it is. Foreign Exchange International purchases become more costly as inflation diminishes the dollar’s purchasing power relative to other currencies. This … [Read more...]
August Inflation Report
The U.S. Bureau of Labor Statistics (BLS) released their August Inflation report on September 12th 2019, for the 12 months through August 2019. Annual Inflation is Down Slightly Annual inflation in August was 1.75% very similar to the 1.79% in May and the 1.81% in July. But still above the 1.65% in June, and below the 2.00% in April. Inflation peaked at 2.95% in July 2018. CPI Index in August was 256.558. July was 256.571, June was 256.143, May was 256.092. April's was 255.548 and March was 254.202. Monthly Inflation for August was disinflationary -0.01%, July was 0.17%, June was virtually zero at 0.02%, May was 0.21%, April was 0.53%, March was 0.56%. Next release October … [Read more...]
How the Currency Exchange Rate Can Affect Business
In finance, an exchange rate is the rate at which one currency will be exchanged for another. It is also regarded as the value of one country's currency in relation to another currency.~Wikipedia Currency depreciation happens when a nation’s currency exchange rate (e.g. the Chinese Yuan) decreases in value in comparison to another country’s currency (e.g. the U.S. Dollar). So, if the dollar increases in value compared to the Yuan, it means U.S. based businesses or individuals could receive more for their money from an overseas supplier than they did previously, even if the price in the foreign currency is unchanged. On the other hand, Chinese companies will pay more for … [Read more...]
How Does Inflation Affect the Cost of Insurance?
What is Inflation and How does it Impact Insurance? Well, to understand the effects that inflation has on insurance, it is crucial to understand what inflation is. Generally, there are two types of inflation "Price inflation" and "Monetary inflation" (i.e. an increase in the money supply). Price inflation is primarily caused by monetary inflation. In this article, we will use the common meaning of inflation and refer to Inflation as a general rise in prices. To understand inflation's impact on insurance, we must first understand that insurance is a monetary instrument i.e. a contract generally between an individual and a company that involves a series of small payments from the … [Read more...]
July Inflation Report
The U.S. Bureau of Labor Statistics (BLS) released their July Inflation report on August 13th 2019, for the 12 months through July 2019. Annual Inflation is Up Annual inflation in July was 1.81% up from June's 1.65% almost identical to May's 1.79% and March's 1.86% but below April's 2.00%. CPI Index in July was 256.571, June was 256.143, May was 256.092. April's was 255.548 and March was 254.202. Monthly Inflation for July was 0.17%, June was virtually zero at 0.02%, May was 0.21%, April was 0.53%, March was 0.56%. June 2018 was 0.16%. Quantitative Tightening (QT) continued but the FED says it is stopping. Check it out here. What is Quantitative Tightening? Next release … [Read more...]
Why Does China Want to Lower the Value of Its Currency?
The U.S. Labels China a Currency Manipulator On August 5th, 2019, the U.S. Department of the Treasury designated China as a 'currency manipulator'. China has been on the U.S.'s watch list for quite some time. The U.S. believes that China "engaged in persistent one-sided intervention in the foreign exchange market". So the U.S. is requesting that the International Monetary Fund (IMF) "eliminate the unfair competitive advantage created by China's actions". Why would China want to keep the value of its currency artificially low? How Currency Exchange Rates Affect Businesses Currencies are constantly changing in value against other currencies. This is based on a variety of factors … [Read more...]
How High Inflation Drives Countries Towards Crypto
What is CryptoCurrency? A cryptocurrency (aka. Crypto), is an alternative form of payment created electronically rather than through government fiat (decree). The idea behind it is that an algorithm creates a limited amount of currency that is available to individuals to use instead of cash, checks or credit cards. The technology behind it allows you to send it directly to others without going through a 3rd party like a bank. Initially, the untraceable nature of cryptocurrency led governments to suspect that it was being used for nefarious purposes. And some notable cases of purchases on the "dark web" were prosecuted like the "Silk Road" case which operated from 2011-2013. Since then … [Read more...]
June Inflation: Down Again
The U.S. Bureau of Labor Statistics (BLS) released their monthly Consumer Price Index report on July 11th 2019, for the 12 months through June 2019. Annual Inflation is Down Again Annual inflation in June was 1.65% down slightly from May's 1.79% which was down from 2.00% in April. The CPI-U Index was 256.143 up marginally from May's 256.092. Monthly Inflation for June was only 0.02%, May was 0.21%, April was 0.53%, March was 0.56%, June 2018 was 0.16%. Next release August 13th Annual inflation for the 12 months ending in June was 1.65% which is below the FED target of 2.00% which may account for FED Chairman Jerome Powell's signaling that the FED will be … [Read more...]
