inflation and its relationship with investors
Date: 8/6/20008


Khlas·h: What is the inflation level and inflation how your life will be affected? This paper followed to answer such questions are


During World War II you a loaf to the price 15 cents, a car kilometers to zero dollars and a house price to average USD price 5000 Did purchased.

The price of a loaf today, a car and a zero kilometers is the average home at the time and smell d have different prices, have been very different.

During the past 60 years we have been many Tvrmhay. When the mid-1970 two-digit inflation in the U.S. it is considered an enemy to their level and that our country is now open inflation Dvrqmy people to the level considered the enemy but to note that neither All people! Although the time of public concern about U.S. inflation has decreased, but never fear of inflation among the people there and depart Nbsth course between inflation is not gone and we never witnessed Tvrmhay although past few years the country's we have.

Prices increase over time, and all have this but the public know about the factors in inflation has little information. What is the inflation level and inflation how your life will be affected? In this article indicated we are to answer such questions.

What is inflation?
Inflation is defined to be constantly increasing general price level and growth of a goods and services it is expressed as percentage. With increasing inflation per dollar before it is two kg of apple Khrydyd now can not buy the same amount. In fact, despite the dollar value of inflation can not remain constant.

Real value of each dollar or any currency is that you consider the purchasing power of the currency and the purchasing power of money, ie the amount of goods and services it can buy.

In your opinion, why in our country a stronger dollar is a Rls. Because the rate of sexual dollars can buy a much higher rate of sexual Rials that can buy what reaches the unit, ie a Rials If inflation is ten percent and the price of a chewing gum is a dollar you can not in other a dollar that you have saved to buy gum and the other 10 cents each time to find some of the same nominal dollars you have a Lee Alvaq the dollar, although in appearance the same dollar terms last year but is weaker ben. Difference between the two is that their purchasing power in two different period (last year and this year) is different with their time.

There are different types of inflation:

Positive inflation (inflation)
When the general price level increases to services.

Prices or negative inflation (deflation)
When the general price level of goods and services decreased to just point the positive inflation

Severe inflation (inflation hyper)
Case that inflation or the general price increases occur rapidly. One of the freest kind of inflation in 1923 in this happens: when the price within one month equivalent to 2500 percent growth. This type of occurrence, at times swelling zeros money is worthless quickly

Record inflation (stagflation)
Combination of record high unemployment and economic record is with inflation. An obvious example in this case occurred in 1970 in industrial countries. When bad economic conditions with increasing price of oil was accompanied by APEC. In recent years, developed countries have tried to inflation in about 2 to 3 percent holder.

Reasons that are inflamed.

Economists always wake up in the hope to take this chance to have the risk factors that can combat inflation. Although no general agreement on inflation factors there are no Creator, but the theories about the public have accepted these are the.

Inflation pressure due to demand (Demand-Pull Inflation) a summary of this theory says that if a lot of money for goods and services amount to little-Chase caused inflation. In other words, if demand for goods and services than supply of goods and services to grow prices will increase and this is the same inflation. It usually growing economies occur.


Inflation pressure due to cost (Cost-Push Inflation) when production costs are high is the company they are forced to take high price for their profit margins continue to keep. This increase in costs can include increased wages, taxes and costs are Vadrat. This kind of price increases due to inflation pressure is called the cost.
Cost inflation.
Although almost all the swelling evil eye and a look at the enemy but not necessarily as it is, inflation of all people have a rate effect. If the enemy is a group of people, some other close friends as well. The effects of inflation as this will depend on whether inflation is expected or not.

If inflation is the rate that people expect it to have (predictable inflation) to offset its effects are comfortable. For example, in the interest rate banks can appeal to your workers can increase the general price level contracts with employers to discuss a Karyshan sit. Vqvh to be major problems when the inflation Pyvndnd the unexpected happens. Some of these problems than inflation landscape can be pointed to the following.

Baznd lenders and loan recipients can benefit from lenders such as inflation did not predict. This is exactly similar to that interest loans or loan recipients to have Hadtr conditions can be much less than that amount of pay that are borrowed.


Uncertainties to the future and this is what happens you might cause Afrd companies do not want to spend the long process hurts the economy.


People who have fixed income reduction in the purchasing power of their monthly Aydyhay level downward course of life is actually thieves Draconian manner to inflation each month the amount of revenue they can force the hands Stand.


If each country's inflation rate above the inflation rate is in other countries internal power products to competitive R or lose.
People often complain of increasing prices and are unaware of the fact that we always during the time we have been faced with this phenomenon and the main issue of increased salary increase is inflation.

Note that inflation finally a sign of the economy is growing Bashdvdr inflation low and sometimes negative, even as inflation and severe acute inflammation can be bad. Lack of inflation might mean that the economy is getting weak now.

As you can see inflation can not always label good or bad was always good or bad depending on inflation and economic شريط depending on your personal situation is.

Chkvnh inflation is measured.
Calculated for inflation and government experts Marysh is not easy? Because Ed Td many goods and services representative of the fluctuations of them is representative of each country in economic fluctuations to basket market basket are collected.

Amount of money necessary to purchase the market basket is the product is calculated and Mqthay different time (usually monthly) re-rate is measured by money.

Let the first times the amount in dollars to purchase a basket of goods, including 200 types of goods or services enough to amount to one month if necessary Khrydhman certain amount of money and fixed the 200 goods and services is equal to 1100 dollars positive control 10 percent inflation during the month was $ 900 more than adequate if we can be said that during the past one month we have had negative inflation and general price level has decreased and not necessarily price all goods, perhaps from among the 200 product type we have seen 15 cases have also increased prices, but the total average general price level has been low.

In North America, the major price indices to calculate inflation there.

Consumer price index:
An indicator that the price changes required goods or household consumers of the goods including weighs like gasoline, food, clothing, and cars are.

In fact, this index price changes of perspective buyers and consumers are households that are made, and weighs the selected products through interviews and other methods Atalaat a collection is obtained from the same household.

Producer Price Indices
A set of indicators that mean major changes in sales prices of domestic production in a period is measured.

Calculate this index is similar to a large Karthqyqaty that is done each month. The U.S. Department of Labor through the communication Hzran retail, service institutions, medical offices and institutions of lessor. Information on thousands of pen computing products for the consumer price index collects.

In the long run inflation rate that the consumer price index and producer price indices show the matches but in the short term producer price indices of growth before the consumer price index is done.

In general, investors depth consumer price index producer price index changes are more important because they feel that this index to close higher.

Inflation and interest rates
The U.S. Federal Reserve rates will be determined by the U.S. central bank is the same. Federal Reserve Board is composed of seven by the Race for president 14 years are selected, but must also reach the Senate confirmation. Council policies such as rate of these responsibilities and the legal interest rate is stored.

Federal Reserve Board during a year 8 times together are goals to short-term interest rates are set. Two important factors influencing their decisions, consumer prices indices and producer price indices are.

Interest rate of the economy are important factors for example, that rates can be directly measured market lending and loans affect credit markets and high interest rates increase mortgage costs for recipients determined to be invalid.

The purpose of Federal Reserve interest rate game with three goals is the following.

Most employment may
Price
An appropriate level of economic growth
As the interest rates come down households increase their consumption and this cause of action to stimulate economic growth.

Unlike the general belief among common people, excessive economic growth can be harmful. Rapid economic growth, inflation and severe acute causes its own problems would be created but should not neglect this point in time the economy No inflation is in fact a stagnant economy and will be standing.

An appropriate level of economic growth and thus an appropriate level of inflation is somewhere in the middle and all the appropriate level of work is the Federal Reserve. High and low inflation rate increase by the Fed in fact an attempt to decapitate is Tvrmhay future. If economic growth to move a horse, we simulate many subjects will be brighter.

This horse to be desired destination quickly or slowly move in the place or even contrary to reason and to move the destination. If the desired speed of the faster horses and desirable move fast economic growth will happen. However, most employment may follow Tuesday, Sbyt prices and economic growth together is essential.

After the horse must also move in the appropriate direction and speed that task to other targets moving Nznd harm the horse is responsible for Federal Reserve interest rate example of a flogging to rein in his hands and speed to set the horse said.

I note that inflation only agent effective decisions is not the Federal Reserve, for example occurrence of crisis situations in financial markets with Federal Reserve may reduce interest rates wants investments to move towards financial markets.

Inflation investors.
One of the important questions about the T in the minds of investors, inflation caused the effect of inflation Gzryhay How will capital. Swelling of your investments depends on the securities that you have on the investment or iodine.

If you invest only in stocks you have your concern is inflation so that the code should be Khvabytan. In the long run evil Ktha The increased price of products and thus higher interest rate if the inflation is not overcome it will not stay behind. Of course there is an exception here and then develop Bshvym record inflation.

Stopping inflation combined with a poor economic conditions or increased costs that inflation is very bad for stock and shareholders of the Company شريط like a consumer and although the rate obtains more money but because of his purchasing power inflation is constantly decreased.

When the swelling is severe. Statistics may be released to the companies so that companies may call upon the growing movement, but a good cheat Analyzer Facts and figures this will not eat.

Analyzer in a position to effect inflation Baybd financial statements, and especially to evaluate the accuracy inventories. Most impact that inflation will be those with the significance of fixed income investments have. Assuming that the amount of your dollars last year in Treasury bonds with 10 percent efficiency investments have.

Finally, the first year your investment should be 10 percent efficiency means the amount equivalent to $ 100 but if the inflation rate in the same year, 8 percent were positive Abasd your real efficiency is equivalent to two percent, ie $ 20, not $ 100 difference between this example well Asms efficiency and shows the actual efficiency.

The growth rate of real rate of return is your purchasing power but the nominal growth rate of return your money.

Fraction of the real rate of return resulting from inflation is the nominal rate of return.

In the example above the real interest rate is equivalent to two percent. May sometimes appear to take the interest rate or real interest rate, but he may be negative.

When inflation is higher than the nominal interest rate. As an investor you to the real interest rate or real rate of return to investment note, while most investors unfortunately only have the nominal rate of return and the rate yield the same amount of real purchasing power of money are are unaware. Conditions may be even your real rate of return is negative. When the nominal yield is less than inflation.

Anti-inflation bonds.
Following the new innovations in the financial markets is that there are a securities investors about whether their efficiency will not be swallowed by inflation ensure.

Treasury securities as a typical example of anti-inflation (Treasury inflation-protected securities) are principle and interest payments that investors like index consumer price index is related to the increase in the consumer index, which is a sign of inflation, the compensation swelling of the payment to investors of principle and interest charge of capital Gzarayhay also will increase the rate of inflation.

Although this type of securities to reach good suggestions, but this Tnzy the common stock on Wall Street is that sales of gas and water coolers in the final days of summer, very easy to convince investors that they should be this Gzaryhayshan towards the capital to maintain inflation.

In recent years inflation has been low so that the inflation problem is an important factor in investor decision is not. In addition, the proposed rate of return this document, risk is so low that not a consideration Angyzd.

Conclusion
After you read the article a general insight about inflation and its effects have achieved. You knew that inflation itself is neither good nor bad. Like many other things in our lives there.

Effects of inflation depend on your location. Heavy rain for the country that the previous predictions and dams has a blessing and a country ready for the rain and the flood is devastating.

According to the summary of the contents are as follows.

Inflation, increased prices a constant level of goods and services
When inflation is moving upwards and is ascending the purchasing power of money comes down
Two accepted theory that the risk factors are inflation Blartnd cost pressure due to inflation and inflation due to demand pressure


When an unexpected inflation in the economy occurs lenders and people who have a fixed income are Baznd, is of high feed costs and reduce uncertainties and costs Bngaha households and power will be weakened competitive exporters.


Absence of inflation or prices is not necessarily good for
Inflation measured through the price indices is done
Two important indicators that price inflation is measured to R are: consumer price index and producer price indexes or wholesale price indices


Interest rates in the U.S. are defined by the Federal Reserve and inflation play an important role in determining interest rates plays.
9 - Game stocks by long-term good are the protection against inflation.