A couple months ago, my cousin and I went to a restaurant to eat lunch. On the menu was a stapled paper reading, “prices on the menu may be inaccurate due to inflation.” Every day after that my cousin had called me requesting a definition of inflation. Every day I had told him, “it is the rising of prices over a period of time, which causes money to lose its value.” Yet, every day that answer never satisfied him. My mistake was giving inflation a blunt definition when in reality, the concept has much more depth. 

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Who is inflation affecting? Why is it happening? Where is it most prominent? How is our government allowing this to happen? These are all valid questions that I now realize can not be answered in a single sentence. Inflation is a layered topic that takes deep diving to understand. 

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Inflation has played a prevalent role in raising the prices of many essential goods over the years. Although my example used food at a restaurant, much more important factors have been affected. 

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Gas prices, for example, have risen astronomically in these past few years. Many citizens are forced to limit their car use because they can not afford the fuel that runs it. This can affect the economy in other ways. Car sales, for example, have decreased at a considerable extent because buyers want to buy smaller, cheaper cars that require less gas. This means that car companies are receiving less income since more consumers are being priced out of the market. 

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Evidently, inflation does not simply affect the one good that is being priced up. It can affect an entirely different corporation, interrupting the natural flow of our economy. Therefore, when people ask, “who does inflation affect?”, it is not simply one group. Every person is affected, whether they are directly associated with the inflated good or not.  

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As for the drastic increase in inflation in current time, the pandemic was a major indicator. COVID-19 caused persistent interruptions in supply production and major food product shortages. Since companies had less products to sell, they had to inflate their prices in order to receive a comparable amount of profit. This is one of many causes for inflation throughout the years.

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Inflation may also occur if too much money is being produced for one country. One instance is the Spaniards in the 1500s, who received an abundance of silver from mines in Potosi. However, the Europeans did not adapt their prices to this fluctuation in silver. So much money was being traded for goods not suitable to the silver's worth, digging Spain into great debt. By the 1600s, Europeans had to rapidly inflate their prices to match the great amount of silver being shipped in. This was a great societal disruption which wreaked chaos in the Spanish Economy. 

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Either way, sometimes inflation is inevitable. It has occurred so many times in the past, that a cyclic pattern can be noticed. 

The real estate business, for example, is a rapidly changing subject. The prices of mortgages are typically in an indirect relationship with interest rates. When a client takes a loan out from a bank to purchase a house, it needs to be certain that they could pay it back. If interest rates are high, real estate sellers will typically mark down the prices of their houses in assurance that the buyer will be able to pay for the house and their money owed to the bank. If interest rates are low, sellers can augment the prices of their real estate because clients won't have as much   interest to compensate and they will be able to afford these larger prices. 

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Around 2008, the United States bank economy crashed. This is because the indirect relationship between interest and mortgage prices was interrupted. Interest rates were at an enduring high for the time, being about 6%. Yet real estate prices were also substantial, and sellers did not lower them despite the increasing interest rates. Along with this, bankers were letting most people borrow loans, but with these monumental interest rates and immense real estate prices, it was not possible for most citizens to compensate for their lease. This put the banks in great debt, and the economy was at an all time low until it began to slowly redeem itself starting in 2012. 

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At the moment, interest is at a relatively excessive rate of over 7%. Although this is high, the real estate prices are lowered to accommodate the rising percentage of interest. This equilibrium is what keeps the real estate market from falling back into debt like it had in 2008. Both of these factors, interest and house prices, need to move oppositely to balance each other out and maintain their cyclic pattern. 

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So although inflation has a negative connotation, it is truly necessary for our society. Restaurants need to inflate their prices in order to keep up with their selling rate. The Europeans needed to inflate their silver prices concerning the great qualities of silver being produced. In the real estate business, interest rates determine the prices of houses, and if one goes down, the other must inflate in order for the economy to function properly. 

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Many people are trying to fight inflation. Some just accept that it is the flow of the economy. Either way, it is occurring at a rapid rate, and resolving this economic issue is not simple. As mentioned before, inflation is a layered topic, and in order to debunk it, you must peel back and inspect all of those factors. Inflation may be inevitable, but sometimes it is important to look into our past to secure our future.