Biflation

AAA

DEFINITION of 'Biflation'

The simultaneous existence of inflation and deflation in an economy. Biflation, while seemingly a paradox, results when inflation in commodity assets coexists with deflation in debt-based assets. Biflation typically occurs when a fragile economic recovery causes the central bank to open up the monetary spigots in a bid to stimulate the economy. This may result in higher prices for certain assets such as energy and precious metals, and declining prices for leveraged assets such as real estate and automobiles. The creation of the term "biflation" is attributed to analyst F. Osborne Brown, who introduced it in 2003.

INVESTOPEDIA EXPLAINS 'Biflation'

Biflation is a term to describe the state of the United States economy in the years after the Great Recession of 2008. The tenuous economic recovery from 2009 onwards was characterized by a high rate of unemployment and a moribund housing sector. This led the Federal Reserve to unleash trillions of dollars in monetary stimulus to jump start the economy, while pledging to keep interest rates low until 2014. As a result, while deflation was apparent in certain sectors such as housing, inflationary trends were evident in the prices of goods such as gasoline, food and gold.

RELATED TERMS
  1. The Great Recession

    The steep decline in economic activity during the late 2000s, ...
  2. Economic Recovery

    A period of increasing business activity signaling the end of ...
  3. Stimulus Package

    A package of economic measures put together by the government ...
  4. Inflation

    The rate at which the general level of prices for goods and services ...
  5. Deflation

    A general decline in prices, often caused by a reduction in the ...
  6. Core Inflation

    A measure of inflation that excludes certain items that face ...
Related Articles
  1. Cost-Push Inflation Versus Demand-Pull ...
    Entrepreneurship

    Cost-Push Inflation Versus Demand-Pull ...

  2. Forces Behind Interest Rates
    Economics

    Forces Behind Interest Rates

  3. Introduction To Inflation-Protected ...
    Options & Futures

    Introduction To Inflation-Protected ...

  4. How Inflation-Fighting Techniques Affect ...
    Forex Education

    How Inflation-Fighting Techniques Affect ...

comments powered by Disqus
Hot Definitions
  1. Passive ETF

    One of two types of exchange-traded funds (ETFs) available for investors. Passive ETFs are index funds that track a specific ...
  2. Walras' Law

    An economics law that suggests that the existence of excess supply in one market must be matched by excess demand in another ...
  3. Market Segmentation

    A marketing term referring to the aggregating of prospective buyers into groups (segments) that have common needs and will ...
  4. Effective Annual Interest Rate

    An investment's annual rate of interest when compounding occurs more often than once a year. Calculated as the following: ...
  5. Debit Spread

    Two options with different market prices that an investor trades on the same underlying security. The higher priced option ...
  6. Odious Debt

    Money borrowed by one country from another country and then misappropriated by national rulers. A nation's debt becomes odious ...
Trading Center