What is inflation?

Inflation is money losing its value. 

Inflation is not prices increasing over time naturally. 

Inflation – or more accurately, currency debasement – occurs when the Federal Reserve creates more money.

When more money is added to the system but the amount of goods and services in the system stays the same, it is logical that the prices of said goods and services will rise.

This inflation is not what the U.S. government tells us?

Correct!

The CPI (consumer price index) that the government uses to tell you what the inflation level is is not indicative of the real inflation.

Instead, it is a manipulated index of a basket of goods and services that does not accurately portray price increases. 

For an in-depth look into CPI and how it is calculated, check out this article.

Ok, so what’s the real inflation?

The number to look at is the amount of money that gets created per year (monetary inflation). This is historically 7-10% per year. This means that the U.S. dollar loses 7-10% of its purchasing power per year.

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