Sunday, June 29, 2008

The Real Deal about Inflation

In an economy like that of USA, about 70% of economic activity comes from consumer spending. And when it looks like consumers will have to cut back on their spending. Then this is bad for the whole economy, including public companies whose shares are traded on the stock market. And that's why investors sell their shares of these companies at a lower price than before.

Rising inflation means people will have less money to spend.As more money(higher prices) is spent on food and petrol and so on and less money to invest hence the stock market fall.Also companies will earn less profit as sales slow down and they will less money to expand.Stock market normally anticipate what a economy will do and at the moment it looks bad hence the fall.
Inflation is the tax that affects us all. It has a great impact on our plans for the future. When saving for retirement, college, a house, or simply budgeting for the next 12 months, the cost of goods and services have a direct impact on your goals. Due to inflation, your goals may cost more in the future than today. As far as your money goes, the kind of inflation we're experiencing can be a real killer. It drives up interest rates. It destroy purchasing power. It can destroy your nest egg. It can affect wages, housing, etc. I found a website where you can understand the situation and track your true inflation at Viritix Inflation Tracker. Viritix's aim is to raise awareness and allow people to track the impact of the fiat money systems that affects their lives. It allows people to understand more about inflation and how it affects them; it aims to track inflation and give individuals an indication of how inflation is affected by what they spend their money on. Do check out this site so you can learn more and understand better on the real deal about inflation in US and let us know how you get on.