Normally we refer to inflation
as decrease in money power to buy so much commodities or the increase of
commodities prices overall in an economy.
According to the universal definition of inflation, inflation is the
continuously increasing trend in the prices. i remembered when I was in mba, my
teacher was always given the stress on continuous word.
One thing amaze me, is that if the universal definition of inflation is that,
means its increasing continuously, and it never stopped but the flow of
inflation decrease or increase, than why the index of inflation shows sometime
the negative figures? Rather it should be positive always.
That is so much important fact, now there is two situations,
1 the definition of inflation is wrong, and it should be revised.
2 the index of inflation is incorrect, so it should be revised.
To understand this theory let understand the situation by an example.
Assume that inflation is water and it is pouring in a tub or in urdu in a balti
and imagine the tub as inflation index, now think about it and assume if water
is pouring continuously the tub than what will be the situation? Will the water
in the tub will reduce? Except if the tub is not leak. no the water will not
reduce ever but will fall extra water on floor, but the water from the tub will
never reduced it will be full always,
conclusion
its means that inflation index should not be negative, rather it should increase
always with some percentage. you also give me comments about that article.