6 Types of Inflation - Satori Traders

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00:51 Creeping Inflation
01:27 Walking Inflation
01:45 Galloping Inflation
03:14 Hyperinflation
03:54 Gold hyperinflation
05:24 Stagflation
05:39 Gold stagflation
06:28 Core Inflation
07:11 Deflation
09:24 Wage Inflation
10:16 Asset Inflation

Creeping Inflation is defined as 3% or less per year.
Walking Inflation is between 3% and 10% annually.
Galloping Inflation is greater than 10% per year.
Hyperinflation occurs when the Inflation rate climbs over 50% per month.

The German Weimar Republic in the early 1920s provides an example of Gold during hyperinflation and how it preserves Purchasing power. In 1918 the Gold Mark and the paper Mark were nearly on par with each other (one Gold Mark = one paper Mark). By 1923 a single Gold Mark was equivalent to one trillion (a 1 followed by 12 zeros) paper Marks. Germans who had Gold survived the hyperinflation with some of their wealth intact, although prices rose so sharply that everyone struggled to maintain their lifestyle and savings. Many Germans lost everything just trying to keep themselves and their families fed.

Stagflation is when economic growth declines or remains flat while Inflation is elevated.

The 1970s show us how Gold performs during stagflation. Gold started the decade at 35% an ounce and by 1980 had reached $850 per ounce. This performance demonstrated how Gold acts as a hedge during periods of stagflation.

Core Inflation extracts food and energy prices from the overall Inflation rate. Gas and diesel prices rise during “driving season” (the summer) and everything that requires transportation (like food) rises as well. Removing these seasonal fluctuations provides a more accurate read on what level of Inflation is currently occurring.

Deflation occurs when there is a general decline in the prices of goods and services. There are two examples of deflation in America. From 1870 to 1890 the country experienced the “Great Deflation” as the Second Industrial Revolution unfolded. In 1929 the “Great Depression” started and didn’t end until 1939. Economic conditions improved during the Great Sag, while the Great Depression was a time of economic suffering.

Wage Inflation occurs over time as the Federal and State minimum wage levels rise. Rising wages are one of the causes of cost-push Inflation so wage Inflation often fails to keep up with the rising cost of living.

Asset Inflation can be either gentle or extreme. Gentle asset Inflation occurs as the economy grows and the money supply expands. Extreme asset Inflation occurs in specific asset classes and oftentimes leads to bubbles that eventually pop.

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