How inflation sharpens your financial focus – on crypto =

Inflation is a term from the economic world. It may seem like a far-from-your-bed show, but this term is also important to you. It has a direct influence on society, but also directly on your purchasing power. In this article we will tell you everything about the meaning of inflation, the advantages and disadvantages and of course we will highlight the link with crypto . Are you reading along?

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  • View quickly
  • What is Inflation?
  • How does inflation arise?
    • 1. Cost inflation
    • 2. Spending inflation
    • 3. Imported inflation
    • 4. Profit Inflation
  • What are the pros and cons of inflation?
  • How do you protect yourself against price fluctuations?
    • How can you maintain your purchasing power?
  • Why print extra money?
    • What are the consequences of printing money?
  • What is the link between inflation and crypto?
    • Inflation vs. Bitcoin
    • Is Bitcoin Going Mainstream?
  • Conclusion

What is Inflation?

Inflation in itself is not a very difficult concept, because it is nothing more than an increase in the price level in the economy . The price of goods and services are often somewhat stable, but they are not set in stone. Price fluctuations are the order of the day, but at the time of writing (September 2021) we are in a wave of increases. If you can buy four croissants at the supermarket for one euro today and suddenly only three for that money tomorrow, then there is inflation.

What you should keep in mind is that it is not an offer that is over the next day. Often not even small goods, such as the croissants, so that’s just an example. It is about a structural increase in the prices of products, on which we spend more money on average. Think of energy contracts, groceries and clothing.

Of course, what is purchased differs for every family, so inflation cannot be pinned down to one or a handful of products. In the calculation of inflation one looks at all goods and services used by the consumer. Last month, Statistics Netherlands (Central Bureau of Statistics, for the Dutchies) reported that products were 2.4% more expensive that month than in the same month a year earlier.

House prices are also currently under fire as they rise to record highs. Since this year, the ECB has also included house prices in the inflation calculation. This strategy is part of the ECB’s revised policy, which should clarify when interest rates will be raised or lowered. This is of course important for consumers, because it has a direct effect on mortgage interest rates and the level of pensions, for example.

 

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