Economic History
Germany's Hyperinflation-phobia
Economic history: Germany's hyperinflation-phobia | The Economist

What is Inflation or What is the meaning of Inflation :

In economics inflation means, a rise in general level of prices of goods and services in a economy over a period of time.   When the general price level rises, each unit of currency buys fewer goods and services.  Thus, inflation results in loss of value of money.   Another popular way of looking at inflation is "toomuch money chasing too few goods".   The last definition attributes the cause of inflation to monetary growth relative to the output / availability of goods and services in the economy.

In case the price of say only one commodity rise sharply but prices of other commodities fall, it will not be termed as inflation.  Similarly, in case due to rumors if the price of a commodity rise during the day itself, it will not be termed as inflation.

What are different types of inflation :

Broadly speaking inflation is divided into two categories i.e.

(a) DEMAND - PULL INFLATION:   In this type of inflation prices increase results  from an excess of demand over supply for the economy as a whole. Demand inflation occurs when supply cannot expand any more to meet demand; that is, when critical production factors are being fully utilized, also called Demand inflation.

(b) COST - PUSH INFLATION:   This type of inflation occurs when general price levels rise owing to rising input costs. In general, there are three factors that could contribute to Cost-Push inflation: rising wages, increases in corporate taxes, and imported inflation. [imported raw or partly-finished goods may become  expensive due to rise in international costs or as a result of  depreciation of local currency ]

What is Deflation ? :

Deflation is the opposite of inflation.   Deflation refers to  situation, where there is decline in general price levels.   Thus, deflation occurs when the inflation rate falls below 0% (or it is negative inflation rate).   Deflation increases the real value of money and allows one to buy more goods with the same amount of money over time.   Deflation can occur owing to reduction in the supply of money or credit.   Deflation can also occur due to  direct contractions in spending, either in the form of a reduction in government spending, personal spending or investment spending. Deflation has often had the side effect of increasing unemployment in an economy, since the process often leads to a lower level of demand in the economy.

What is Stagflation :

Stagflation refers to economic condition where economic growth is very slow or stagnant and prices are rising.  The term stagflation was coined by British politician Iain Macleod, who used the phrase in his speech to parliament in 1965, when he said: “We now have the worst of both worlds - not just inflation on the one side or stagnation on the other. We have a sort of ‘stagflation’ situation.”    The side effects of stagflation are increase in  unemployment- accompanied by a rise in prices, or inflation. Stagflation occurs when the economy isn't growing but prices are going up. At international level, this happened during mid 1970s, when world oil prices rose dramatically, fuelling sharp inflation in developed countries.
 

What is Hyperinflation :

Hyperinflation is a situation where the price increases are too sharp.  Hyperinflation often occurs when there is a large increase in the money supply, which is  not supported by growth  in Gross Domestic Product (GDP).  Such a situation results  in an imbalance in the supply and demand for the money.  In this this remains  unchecked;  it results into sharp increase in prices and depreciation of the domestic  currency.

What is Headline Inflation

Headline inflation refers to inflation figure which is not adjusted for seasonality or for the often volatile elements of food & energy prices, which are removed in the Core CPI (Consumer Price Index). Headline inflation will usually be quoted on an annualized basis, meaning that a monthly headline figure of 4% inflation equates to a monthly rate that, if repeated for 12 months, would create 4% inflation for the year. Comparisons of headline inflation are typically made on a year-over-year basis. Also known as "top-line inflation".

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lubber |ˈləbər|noun1 archaic or dialect a big, clumsy person.2 short for landlubber.DERIVATIVESlubberlike|-ˌlīk|adjective.lubberlyadjective& adverbORIGIN late Middle English: perhaps via Old French lobeor ‘swindler,parasite’ from lober ‘deceive.’

leverage |ˈlev(ə)rij, ˈlēv(ə)rij|

noun

1 the exertion of force by means of a lever or an object used in the manner of a lever: my spade hit something solid that wouldn't respond to leverage.

• mechanical advantage gained by using leverage: use a metal bar to increase the leverage.

• the power to influence a person or situation to achieve a particular outcome: the right wing had lost much of its political leverage in the Assembly.

2 Financethe ratio of a company's loan capital (debt) to the value of its common stock (equity).

• the use of credit or borrowed capital to increase the earning potential of stock.

verb [ with obj. ]

1 (usu. as adj.leveraged) use borrowed capital for (an investment), expecting the profits made to be greater than the interest payable: a leveraged takeover bid.

2 use (something) to maximum advantage: the organization needs to leverage its key resources.

balance sheet |ˈbæləns ˌʃit|

noun

a statement of the assets, liabilities, and capital of a business or other organization at a particular point in time, detailing the balance of income and expenditure over the preceding period.

equity |ˈekwitē|

noun ( pl. equities )

1 the quality of being fair and impartial: equity of treatment.

• Lawa branch of law that developed alongside common law in order to remedy some of its defects in fairness and justice, formerly administered in special courts.

• ( Equity )(in the US, UK, and several other countries) a trade union to which most professional actors belong.

2 the value of the shares issued by a company: he owns 62% of the group's equity.

• (equities) stocks and shares that carry no fixed interest.

3 the value of a mortgaged property after deduction of charges against it.

ORIGIN Middle English: from Old French equité, from Latin aequitas, from aequus ‘equal.’

mortgage |ˈmôrgij|

noun

the charging of real (or personal) property by a debtor to a creditor as security for a debt (esp. one incurred by the purchase of the property), on the condition that it shall be returned on payment of the debt within a certain period.

• a deed effecting the conditions of a mortgage.

• a loan obtained through the conveyance of property as security: I put down a hundred thousand in cash and took out a mortgage for the rest.

verb [ with obj. ]

convey (a property) to a creditor as security on a loan: the estate was mortgaged up to the hilt.

• expose to future risk or constraint for the sake of immediate advantage: some people worry that selling off federal assets mortgages the country's future.

DERIVATIVES

mortgageableadjective

ORIGIN late Middle English: from Old French, literally ‘dead pledge,’ from mort (from Latin mortuus ‘dead’) + gage ‘pledge.’