Gold, Silver, Equity and Inflation

Inflation refers to an overall increase in the Consumer Price Index (CPI), which is a weighted average of prices for different goods. The set of goods that make up the index depends on which are considered representative of a common consumption basket.

The Federal Reserve targets a 2% inflation rate, based on the Consumer Price Index (CPI).

The main causes of inflation can be grouped into three broad categories: demand-pull, cost-push, and. inflation expectations.

Monetary policy primarily involves changing interest rates to control inflation. Governments through fiscal policy, however, can assist in fighting inflation. Governments can reduce spending and increase taxes as a way to help reduce inflation.

Although high inflation hurts an economy, deflation, or falling prices, is not desirable either. When prices are falling, consumers delay making purchases if they can, anticipating lower prices in the future.