Inflation

Inflation is the process of money depreciation in the result of which it is possible to purchase fewer goods on the same sum of money. In practice it is reflected in prices rise.

The opposite process is deflation. This is the process when the prices decrease. In modern economics this process is met rarely and doesn't last for long time and usually has the season character.

For example the crops prices usually decrease at once after the harvest collection. But deflation is characteristic for the Japanese economics (in the limits of -1%).

There are several reasons for inflations. First of all the general goods volume may increase slower than the volume of money. It may even decrease. In such way the price of goods increases and the money value decreases.

As the goods volume is directly connected with the money volume, when the circulation speed increases in the system, the money value decreases. (The same system may get the same money volume if to increase the speed of its circulation). The volume of the money mass also influences the level of inflation that appears as the result of the long-time deposits when there is no possibility to get money quickly.

Inflation is always the result of economical instability. First of all people of the average profits suffer from it.

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Nowadays we can be sure about the fact that money rules the world. Money has different look, it varies from country to country.

But the main essence is left. If you have money you rule the world and people but if you don't then you are not more than just a human being.

In the modern world money is not certain goods, as for example the gold in the past, but the commitment of the countries and the central banks. In fact without this commitment money is the paper and doesn't have any value.