The price of vegetables has risen, the price of fruits has risen, the price of pork has risen, and the number of goods that can be bought is getting smaller and smaller for the same 100 yuan......
Behind these things that are closely related to our daily lives are a series of reactions triggered by inflation.
So, what exactly is inflation?
The official explanation is that under the credit money system, the amount of money in circulation exceeds the actual needs of the economy, resulting in a comprehensive and sustained depreciation of the currency and a continuous rise in the price level. In layman's terms, the issuance of paper money exceeds the actual amount needed in circulation, which causes the depreciation of paper money and the rise in prices, which is called inflation.
To put it in a simple and easy-to-understand sentence, it is that there are too many currencies circulating in the market, and in fact there is no need for so much, which leads to currency depreciation and shrinkage, and prices rise, so there is inflation.
In other words, inflation has made money worthless, purchasing power has decreased, and you can only buy one pair of slippers for ten dollars.
Let's take an example, in a small kingdom, there are 100 citizens, and each of them has ten gold coins in their hands, so there are 1,000 gold coins in this small kingdom. Similarly, there are 1,000 items in this kingdom, so the price of each item is one gold coin, and each citizen's gold coins can buy ten goods.
With the continuous improvement of the productivity of the small kingdom, the original 1,000 goods doubled to 2,000 goods, and at the same time, the social wealth was also growing, at this time, the king sent people from the territory to arrive 3,000 gold coins, confirming that the whole country had 2,000 goods and 4,000 gold coins, but the price of each commodity rose from the original one gold coin to two gold coins, and this process is called inflation.
It used to be a gold coin that could buy a commodity, but now it has become a gold coin, and you can only buy 0.5 commodities, and the gold coin is still the same gold coin, but the purchasing power has decreased, that is, the currency has depreciated and the price has risen.
In fact, economists all believe that moderate inflation has a benign effect on social and economic development. Because moderate inflation will lead to higher prices, stimulate factories to produce goods, factories can also drive employment, and at the same time, workers' wages will increase accordingly, and the state can also collect more taxes for infrastructure investment, such as building railways, airports, houses, etc., so that the whole country will become more and more prosperous, so moderate inflation has a positive side for the entire social and economic development.
However, once there is hyperinflation or severe inflation, then this situation will bring huge losses to the whole society, and even lead to a significant decline in the living standards of residents.
Let's continue to give an example, many years have passed, if this small country has a large increase in population and social productivity, then the infrastructure of this small country will become more and more prosperous, for example, supermarkets, banking companies, etc. will be born.
If this small country issued an additional 1 million currency this year to stimulate consumption, at this time, the largest real estate developer Lao Wang took 400,000 of them, the department store Lao Ma took 400,000, and the big pig farmer Lao Ding took 200,000 (the circulation of currency takes time, and it will flow to the rich people as soon as possible), and Xiao Liu, who has a little economic acumen, also saw business opportunities from this policy, and he used 10,000 yuan in his hand to start hoarding goods, and the hoarding price was only one dollar per commodity.
Half a year later, Lao Wang's house was snatched up, Lao Ma's department store was overcrowded, the price of pork rose, Lao Ding made a lot of money, and Xiao Liu's hoarded goods changed from one yuan to three yuan, earning enough two yuan for the difference.
And by this time, the ordinary people of this small country finally felt the rise in prices, but their wages did not rise, in fact, the currency depreciated, and the money in their hands shrank.
In this way, Lao Wang, Lao Ma and Lao Ding are getting richer and richer, and Xiao Liu has also made a lot of money, but the vast majority of ordinary people are still standing still, inflation has triggered currency depreciation, and the income of residents' savings has begun to shrink when they can't catch up with inflation, so hyperinflation is very unfavorable to the economic development of the whole society, and even causes a series of social problems.
For example, in recent years, Zimbabwe's inflation, a cup of coffee sold to 2 million, but the daily salary of ordinary people is only 5 million, that is to say, the daily salary is only enough to drink three cups of coffee, and the most serious thing is that in 2008, Zimbabwe's inflation rate even reached 2,200,000%, how to understand this? You can imagine that one day you use a stroller to push a cart of money to buy vegetables, the road in the market is too narrow, you put the car and money at the door of the vegetable market, and when you come back after buying vegetables, your money is still there, but the car is gone.
Under severe inflation, the preciousness of commodities can be more reflected.
Of course, this is not the worst inflation, the worst inflation in human history occurred in Hungary after World War II, when 1000 trillion denominations of paper money appeared in Hungary, what is the concept of 1000 trillion?
In 1946, the price of a pound of bread in Hungary was 3 billion pango (Hungarian currency), and Hungary even considered issuing a huge banknote of 10 trillion yuan.
It was not until the end of 1946 that Hungary introduced a new currency, and inflation finally withdrew from its historical stage.
Epilogue:
So what is inflation? To put it simply, there is too much money circulating in the market, far more than the amount of money actually needed, in which case the money will depreciate and prices will rise.
Most economists believe that moderate inflation will promote healthy economic development, while hyperinflation will do more harm than good.
Wan Ziwen said: Every word of the article was typed out by me, and I clicked "watching" to let me know that you are also "doing your best" for life.
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