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People Are Getting Worried About Inflation – What Is It?

Inflation is when prices go up and the value of your dollar goes down. In an average year, the government tries to keep inflation at about 2%. But now, people are worried that the government is printing too much money, which will cause massive inflation. Our leaders tell us, “Don’t worry about it.” They say if there is no major inflation, we’ll be fine, and everything will be back to normal soon.

Everything is expensive.

Inflation affects the cost of everything. If you look around you, everything is extremely expensive. College costs have been inflated by over 50% in the past 20 years, and that percentage is expected to rise. One expert says to budget for a 5% tuition increase every year.

There’s also housing. In the past, people in their twenties could afford to buy a house or rent a decent place. Now more young people are living with their parents because housing is just too expensive. The price of a house has gone up over $130,000 in the past 20 years. How are Millennials like me and Gen Z people younger than me expected to pay so much more than their parents did?

Bonds and inflation

When you buy a bond, you’re loaning the government or company money. So, buying bonds shows your belief in a certain company’s strength or – if it’s a government bond – in the American dollar. People buy bonds because the government pays them interest. When lots of people want to buy bonds, interest rates are low; when they don’t, interest rates go up.

The interest rate is now going up, which is a signal that people aren’t buying. Many investors think that inflation will be higher than the interest rate the government is offering. If they buy a bond and make 1% interest – and inflation is at 3 or 4%– they’re going to lose money.

Prices are going up. People lost faith in bonds, and we’re printing more money. What could this mean for the rest of 2021 and 2022? Are you worried about inflation? Let us know in the comments below. And be sure to follow Bold TV on all social media platforms!

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