News The Definition of Deflation and Inflation - Which is...

The Definition of Deflation and Inflation – Which is Better?


Do you know what the differences are between the economic terms, “inflation” and “deflation”? There is a distinct difference between both and its important for investors to understand what the advantages and disadvantages are to having either in an economy. Based on my research I’ve come to the conclusion that inflation should be investors biggest fear while deflation is nowhere in sight.

I will offer you some insight into why I feel this way and how you can protect yourself from big inflation.

What is Deflation definition? To understand what this term means, just think of the Great Depression – Falling prices of just about everything – stocks, housing, food, wages, etc. Economic activity comes to a halt and there is mass unemployment and no money to go around. Unemployment can actually reach levels higher than 20 percent in a country when this happens.

Deflation is the worst for people who have a lot of debt but is good for savers and people who have money in the bank, because their purchasing power will increase during deflation.

What is Inflation? Inflation is basically when prices increase every year because the money supply increases. While unemployment may be much lower during inflationary periods, the value of the country’s currency tends to be much lower. So while people have jobs and earn money, the money they are saving has little value and buys much less stuff.

The best investment during an inflation are anything BUT holding currency and include hard assets such as precious metals, food, land, etc.

I believe we are already experiencing big inflation which will only get worse. The USA simply has too much debt and Ben Bernanke, the Federal Reserve chairman, will not allow a deflationary setting to occur. He will keep the printing presses hot to prop up the economy and make the governments debt easier to pay.

There are several things you can do to protect yourself. If you want to be conservative you may want to consider putting your money in inflation protected bonds or inflation savings account. If you want to protect your money even more and perhaps take on more risk, you should consider investing in commodities like oil, gold, silver or even farm land investments.

Hopefully now you understand the differences between inflation and deflation and how to protect yourself from both scenarios.

Previous articleGoogle Drive Vs Sky Drive
Next articleThe Cat Behavior
The Definition of Deflation and Inflation – Which is Better?
General Contributor
Janice is a writer from Chicago, IL. She created the "simple living as told by me" newsletter with more than 12,000 subscribers about Living Better and is a founder of Seekyt.

Latest news

Japanese Owl Meaning and Symbolism

If you're wondering about the Japanese owl meaning and symbolism in Asian cultures, the Owl, along with Maneki Neko...

What Are the Signs of Depression in Women

Gender and depression have long been the scope of research in the field of emotional disorders; most authors believe...

Top 7 Superfoods for Men to Stay Young

Superfoods are generally regarded as targeted foods that provide the maximum nutritional benefit - thus these foods are nutritionally-dense...

Best Brain foods for Kids – Boost Brain Power and Keep Sharp

A child's brain is developing rapidly and if you want them to improve their performance in school and their...

7 of the Best Brain Foods for Studying

The foods that you eat can improve the functioning of your brain. Just like drugs, foods have amino acids,...

B12 Shots for Dogs – 10 Key Benefits

The end of 2010, my little dog -- a 7-pound Papillon -- became very stressed after a flood in...

Must read

Home Health Aide Employee Independent Contractor

Home Health Aide Employee Independent Contractor If...

Types of Teeth and What They Do

We all know our teeth have distinct differences in...
- Advertisement -

You might also likeRELATED
Recommended to you