Inflation, Simplified

Have you ever taken a $100 dollar bill, ripped it in half and tried to purchase something with it at the supermarket?

It turns out, the store is not obligated to accept it.

Why not? Because you’ve just made the money “unfit” for use.

See, you can’t take a $100 bill, rip it in half (or even smaller pieces) and expect it to be accepted as money with the same value, or even for each piece to still be worth $100 dollars individually!

But in some ways… this is exactly what the Federal Reserve bank has done.

The only difference is that they are clever enough to rip just a tiny little 2% edge off of the dollar bill each year, so you and the merchant hopefully won’t notice, and you’ll still continue to use this toilet paper as legal tender.

Fun fact: In 2023, after the global pandemic, the inflation rate shot up to an average of 8%, but some individual products (housing, transportation, food) went as high as 25%. Those were some really big rips off the dollar bill in your pocket, that’s why you felt it. That’s why everything costs more now.


Disclaimer: This article was written for educational and entertainment purposes only. This is NOT financial advice. Always do your own research and please consult with a licensed attorney before making any serious investment. We are not responsible for any investment decisions that you choose to make.

Mike K.

Mike is a front end web developer and marketing specialist. He enjoys writing about the internet, technology, finance, investing and health related topics.