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Inflation update — and a reminder about our FREE Inflation History special report

Does it seem as though lots of prices are going up? They are. Year-over-year price increases hit 3.6% as of the end of May, according to last week's report (PDF) from the U.S. Bureau of Labor Statistics. As recently as November, that rate of increase was only 1.1%, as shown in the graph below.

Most people think of price increases as "inflation" — and that's true in a sense. But, strictly speaking, inflation is related to the supply of money available. When too much money begins to circulate (i.e., an imbalance is created between available money and available assets), the value of money is lessened.

Prices go up not because things are inherently more valuable than they were before, but because the money used to buy those things is worth less than before.

A sharp increase in the money supply over the past three years has led some economists and analysts to predict significant levels of inflation ahead — and that could have a big impact on your finances.

SMI founder and publisher Austin Pryor, author of The Sound Mind Investing Handbook, has written an easy-to-read guide that explains the connection between excessive money creation and the rising cost of living — and we'd like you have a complimentary copy.

This 22-page report, Inflation History: The Rise and Fall of the U.S. Dollar is available FREE to our SMI blog readers. Simply download a PDF copy from our Free Reports page — and check out our other free reports while you're there!

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