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Inflation is at a 30 Year High. What that Means for Your Law Firm.

Inflation is at a 30 year High.
What that means for Your Law firm.

November 12, 2021

The most recent inflation numbers in the US are showing that as a result of accommodative monetary policy (low interest rates), and extraordinary fiscal policy (government stimulus programs) in response to the pandemic, inflation has climbed over 6% for the first time since 1991.  Inflation affects how every company does business and also affects the family budgets of every family in the nation.

Understanding Inflation

The causes and effects of inflation are complex, but in the simplest terms inflation is the rate of increase of prices over time.  As inflation increases, everything becomes more expensive.  Said another way, it is a decrease in the value of a dollar.  When the federal reserve creates money to keep interest rates down, the total money supply increases.  With the increase in the number of dollars, each dollar is worth less, so it takes more dollars to purchase things.  Inflation can be extremely deleterious to an economy, since it erodes the buying power of every member and business in a society.

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