Who Or What Causes Inflation?

Inflation is affecting all of us right now. And for many of us, we personally feel the hit in our wallet and our bank accounts. I've calculated that it's costing me and my family right at $8,000 per year just on the basics like fuel, food, and utilities.

I shouldn't have to write this disclaimer but in today's political climate, I feel I should. This is not a political or a partisan opinion. Although I do have plenty of both of those, I intentionally keep them out of my blog.

So who or what causes inflation? The answer is very simple thus this blog will be short. Here's a hint: It's not the Federal Reserve.

Inflation defined

Inflation is caused when the supply of money in circulation grows larger and the quantity of goods and services on the market doesn't grow to match it.

Who really controls the money supply?

No institution has direct control over the economy but the government IS in direct control of the money supply. As a result, the government causes inflation.

Everytime inflation occurs the government is responsible. Please don't listen to lies, spin and misdirection that tries to blame it on others. Whether that's "greedy" labor unions, "greedy" corporations, "greedy" banks, the Federal Reserve, foreign countries or U.S. consumer habits.

It's always and only the government and its policies that is ultimately responsible for inflation.

However, the government is responsible to the public and the public has a tendency to want the government to print more money. This can produce short term benefits but leads to long term problems like inflation.

What can you do?

The current generation of politicians in Congress of both parties are only the latest manifestation of the problems that have led us to this current situation we're in. If we want to fix this problem, we also need to realize who is actually responsible for fixing it.

That answer is also relatively simple. The answer is looking back at you everyday in the mirror. We have to elect new and better leaders in both parties.

Politicians are like diapers, they need to be changed often and for the same reasons. -Mark Twain

Keep that in mind next time you vote.

You need a plan

If you're interested in "beating the market" or finding the next "hot stock" we can't help you.

If you're interested in creating a goal-focused, long-term plan to ensure you don't run out of money in retirement we can help you.

We create and manage retirement income and investment plans for electric cooperative retirees to ensure the money you have saved lasts the duration of a 20-30 year retirement and beyond.

We work to ensure the money you need in the early years of retirement is safe and not subject to temporary market fluctuations, while at the same time putting the money you'll need in the later years of retirement in a position to receive the permanent market returns necessary to provide an income that increases and outpaces inflation.

For more articles about retirement planning and investing click here.

Brian Coleman/Electric Cooperative Retirement Specialist

80/20 Financial Services is an Independent Registered Investment Advisor (RIA) registered in the state of Missouri (CRD# 300772). We help electric cooperative employees in Missouri and throughout the United States plan their retirement. Being independent allows us to work exclusively for YOU.

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