Inflation along with all its dangers has been with humankind for as long as recorded history. The earliest writings about it can be found in the Holy Bible and date back to approximately 5,000 years before the birth of Christ. None other than King Solomon created this first recorded dangerous inflation, according to the bible, when he began assembling all the materials to build the Temple. It had a disastrous end as well as the Temple was later destroyed when the children of Israel were conquered and carried into captivity in Babylon.
From this point forward inflation has been a destroyer of nations on the earth as the records of history reveal. However, not all inflation is necessarily bad for the economic outlook of nations. Rather it's the failure to control inflation in an orderly manner that causes the disasters like we've seen recently in Russia, the Philippines and other countries of the world. Furthermore, inflation can be caused from within a country or it can be caused by factors outside the country's ability to control them. This is what has happened in many of the modern instances where economies have been ruined under the crush of inflation.
Inflation too affects many others as it radiates outward from whatever its source might be. Therefore it's important that we understand some of the terms we hear, almost daily on the news, and read in newspapers concern what exactly inflation is. And, in some cases what inflation is not.
An economy whether it be a free enterprise one or a rigidly controlled one like the Chinese economy is in reality a dynamic business that operates in what are known as business cycles. These cycles represent the changes in the economy and since the Industrial Revolutio ...