Inflation is the increase in the price you pay for goods and services, which affects the purchasing power of your money. This is more accurately called "price inflation" as compared to "monetary inflation".  As inflation increases, the value of your money decreases. There are many different causes of inflation, but the most important cause is an increase in a country’s money supply. When the government decides to print money or implement a quantitative easing program, the money supply is increased (i.e. monetary inflation), thus affecting the general level of prices. As we can see in the following chart, the Federal Reserve engaged in three phases of quantitative easing i.e. QE1, QE2, … [Read more...]