Inflation, or the gradual increase in the price of goods and services over time, has a variety of positive and negative consequences. Inflation reduces purchasing power, or the amount of something that can be bought with money. Because inflation reduces the purchasing power of currency, customers are encouraged to spend and store up on products […]
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Unexpected inflation hurts lenders since the money they are paid back has less purchasing power than the money they lent out. Unexpected inflation benefits borrowers since the money they repay is worth less than the money they borrowed. Who is harmed by unexpected inflation? Savers and creditors suffer from unanticipated inflation since the money they
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Inflation occurs when the value of a currency, such as the dollar or the Euro, depreciates over time, causing the cost of commodities to rise. Bitcoin (and a few other cryptocurrencies) are built to have predictable and low inflation rates. What exactly is crypto inflation? Many cryptocurrency supporters consider it to be a digital equivalent
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Bond funds are popular among risk-averse investors for a variety of reasons. U.S. Treasury bond funds are at the top of the list because they are considered to be one of the safest investments. Investors are not exposed to credit risk since the government’s capacity to tax and print money reduces the risk of default
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During inflationary periods, stocks are often a safe refuge. This is because stocks have typically produced total returns that have outperformed inflation. And certain stocks outperform others when it comes to combating inflation. Many recommended lists for 2022 include small-cap, dividend growth, consumer products, financial, energy, and emerging markets stocks. Industries that are recovering from
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With the enactment of the New Deal’s National Industrial Recovery Act in 1933, the first federal minimum wage was established. The ultra-right Supreme Court of the time quickly declared it unconstitutional. In 1936, President Franklin D. Roosevelt ran for reelection on the promise of continuing to fight for a federal minimum wage. In contrast, the
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During a recession, you might be tempted to sell all of your investments, but experts advise against doing so. When the rest of the economy is fragile, there are usually a few sectors that continue to grow and provide investors with consistent returns. Consider investing in the healthcare, utilities, and consumer goods sectors if you
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Business leaders and policymakers want to know how long it will take for the economy to recover after an economic boom ends in a recession, as it did when the real-estate bubble burst. According to research by Chicago Booth PhD candidate Yunzhi Hu, the recovery path is determined by the length of the preceding economic
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The Consumer Price Index (CPI) and the Personal Consumption Expenditures Price Index are the two most commonly quoted indexes for calculating inflation in the United States (PCE). These two measures use distinct methods for calculating and measuring inflation. What Is CPI Inflation? CPI inflation is calculated by the Bureau of Labor Statistics (BLS) using spending
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The 1981-82 recession was the greatest economic slump in the United States since the Great Depression, prior to the 2007-09 recession. Indeed, the over 11% unemployment rate attained in late 1982 remains the postwar era’s pinnacle (Federal Reserve Bank of St. Louis). During the 1981-82 recession, unemployment was widespread, but manufacturing, construction, and the auto
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