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During World War II, you could buy a loaf of bread for $0.15, a new car for less than $1,000 and an average house for around $5,000. In the twenty-first century, bread, cars, houses and just about everything else cost more. A lot more. Clearly, we've experienced a significant amount of inflation over the last 60 years.
When inflation surged to double-digit levels in the mid- to late-1970s, Americans declared it public enemy No.1. Since then, public anxiety has abated along with inflation, but people remain fearful of inflation, even at the minimal levels we've seen over the past few years. Although it's common knowledge that prices go up over time, the general population doesn't understand the forces behind inflation. (To learn how to use inflation when trading currencies, read Forex Walkthrough: Economics.)
What causes inflation? How does it affect your standard of living? This tutorial will shed some light on these questions and consider other aspects of inflation.
Next: Inflation: What Is Inflation?
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