Enter Inflation Rate as a percent, for example enter 3.5 for an inflation rate of 3.5 percent.
Enter Interval Years as full years or years and tenths of years, for example enter 3 years and 6
months is 3.5 years. (4 months = .33 years, 3 months = .25 years, 1 month = .08 years). When you click
on [Calculate] button, the calculator will return Final Value (what the Initial Value will
be worth in real terms after Interval Years), and Replacement (how much will be required to
equal value of Initial Value after Interval Years).
Inflation is a rise in the general level of prices of goods and services. The inflation
rate is calculated by measuring the increase in prices in a fixed basket of goods and services
purchased by a typical consumer. Since this basket of goods and services does not accurately
reflect the actual goods and services purchased by a typical consumer, the result is a
tremendous amount of hidden inflation. The government claims inflation in 2013 ranged between
1.1 and 2.0 percent. Anyone who goes to a grocery store or gas station knows inflation is
running much higher than that.
Inflation is caused by the quantity of money in an economy growing faster than the supply
of goods and services in the economy. The greatest increase in the quantity of money in the U.S.
economy is caused by the Federal Reserve issuing bonds to itself, often referred to as "printing
money". Increasing the money supply in this manner is a way for the government to create a
hidden tax on consumers which it can use to bail out the economy after the deep recession caused
by the banking industry.
Ben Bernanke, current chairman of the Federal Reserve, thinks a 2 percent inflation rate is
a proper target to shoot for. In actuality, the Federal Reserve is charged with keeping the
value of the dollar constant. However, the current goal of the Federal Reserve is not to follow
its charter, it is to increase economic activity. In response to the recognition that keeping
interest rates close to zero is causing seniors and other peoples savings to lose value,
Bernanke said "that's the price we have to pay".
for more information about Inflation, Ben Bernanke, and the Federal Reserve.