/ / The essence of inflation. The reasons for its occurrence

The essence of inflation. Causes of its occurrence

Inflation is a serious threat.macroeconomics of any country. The destructive effect of this phenomenon is growing like a snowball, and if you do not take countermeasures in time, collapse cannot be avoided. In this article we will try to consider in detail the following aspects of such a negative economic phenomenon as inflation: the nature, causes, types.

The term for this phenomenon originates fromThe Latin word "inflatio", which translated into Russian means "swelling" or "swelling." The fact is that the very essence of inflation consists in the prolonged and fairly rapid depreciation of money caused by an excessive and unreasonable increase in the number of cash and non-cash funds in circulation. That is, the money supply in circulation seems to be “swelling up” and “swelling up”. And this “bloating” leads to a colossal imbalance in the economy - an imbalance of supply and demand.

Briefly, the essence of inflation can be described as follows.scheme: the issue of money - the depreciation of money - the rise in prices - emission. That is, the release of a large amount of paper money, unsecured by the gold reserves in the treasury of the state, causes their depreciation and, as a result, a continuous increase in prices. Rising prices require large cash outlays, which leads to a shortage of money in circulation and, further, to the next paper and money issue. And this one increases in size, dragging the state into a deep economic pit.

It should be noted that inflationcharacteristic for the circulation of paper money, in terms of the work of real values ​​(gold or silver), it is simply impossible. In itself, this economic phenomenon cannot be called a product of a modern economy. Returning to the events of historical prescription, it is worth noting that such processes are generally characteristic of an unstable economy: during periods of war, revolution, crisis, when moving from one economic management system to another, etc. Inflation, the essence of which is fully manifested in these cases, is caused by a violation of the law of money circulation due to the financing of state expenses through the issuance of paper money.

It is wrong to identify the essence of inflation only withprice increase. This socio-economic phenomenon is much more complicated. In addition, inflationary processes are possible without price increases, when money depreciates, for example, when there is a shortage of goods, in the case of fixing the cost of goods by the state. At the same time, there is no real decrease in the value of the monetary unit, but the monetary incomes of the population are depreciated, since there is no opportunity to spend savings on the purchase of scarce items. The increase in the volume of such “forced” savings leads to the formation of an “inflation overhang”, under the influence of which the state decides on a planned increase in prices. That is, if the balance of commodity-money relations is out of balance, the state's economy is experiencing the appearance of inflation and its grave consequences.

There are three main types of inflation, depending on the rate of price increase:

  • moderate or creeping (growth up to 10% per year);
  • galloping (from 20% to 200% per year);
  • hyperinflation (over 200% per year).

The main reasons for the growth of the money supply, initiating inflation processes:

  • the imbalance of state revenues and expenditures, namely, the budget deficit;
  • excessive investment, leading to excessive production of one type of product and the deficit of another;
  • state military spending;
  • social and political extraordinary circumstances, like strikes, political instability, etc .;
  • errors in the conduct of such state policies as price, tax, budget, credit and money.

Thus, the essence of inflation, as a multifactorial phenomenon, is in any process of depreciation of money, price increases and an increase in the money supply.