Our first reaction when hearing that inflation is going to strike again is “No, not again!” Although many people do not know the definition of inflation, they know that it is something it should not be wished for. In fact, inflation is what makes the prices soar. We can be sure that inflation is there whenever, suddenly, food and various services cost more. This is when we take more money out of our pocket in order to pay for the same goods that we usually buy. This is the effect of the decreasing purchasing power of currencies which translates in a loss in their real value.
Inflation is sometimes followed by another frightening phenomenon: the hyperinflation. When inflation cannot be controlled anymore, this is when hyperinflation appears, as a result of excessive money supply. Governments usually appeal to this extreme measure in order to fight economic crisis. It is often triggered by social turmoil, wars or currency meltdowns. The new printed money has no back-up in gold or other precious metals and therefore it will lead to inflation again, thus creating a vicious circle. Although inflation is believed to have positive results too, they often remain in the shade of the negative ones.
The food prices following an upward trend no longer represent a piece of news today. Usually when the price of oil soars, it is soon followed by that of food. Fearing that more inflation is still to come, people tend to purchase everything they consider necessary for the future and make stocks. This is how shortages appear. Knowing that the value of their money savings might decrease, people also put a hold to their saving and investing. Some prefer buying gold and other valuable metals on which inflation has no effect. The advice of specialists in this respect is precious.
When people begin to accumulate goods, the prices rise and the economy stagnates, it is time for governments to interfere. What they generally do is pump more money in the economy. This measure, however, leads to more devaluation. This is what happened in the US as well. After the Federal Reserve had printed some more money out of thin air, the value of the dollar went down. Thus, evidently, issuing more money leads to more inflation. According to the specialists, a low or a steady medium inflation rate is beneficial for every economy. It is considered to mitigate the effects of economic crisis by preventing the interference of the monetary policy.
Inflation is already part of our lives and some of us have even gotten used to its outbreaks every now and then. In order to keep our assets safe from it, we have to consider buying gold or other precious metals and make them part of our investments portfolio. This is how we can maintain the value of our assets regardless the inflation.
Professionals can teach you how buying gold can work for you in times of recession