Inflation is a process of rising prices in general and constantly associated with the market mechanism that can be caused by various factors. Terebut factors, among others, increased consumption, excess liquidity in the market that triggered the consumption or even speculation, as well as due to the lack of launch distribution of goods. In other words, inflation is also a decline in the value of the currency continuously. Inflation is the process of an event, not a higher or lower price level. That is, the price level is considered high inflation does not necessarily indicate. Inflation is an indicator to see the rate of change, and is considered to occur if the price increase takes place continuously and mutually influence affect.
Inflation can be caused by two things, namely pull demand (excess liquidity / currency / medium of exchange) and the second is the insistence of production and distribution (including the lack of production and lack of distribution). For more affected first because of the role of the state in monetary policy (Central Bank), while the second is more affected because of the role of the state in which the policy executor in this case held by the Government, such as fiscal (taxation / levies / incentives / disincentives), infrastructure development policy , regulation.
Based on its origin, inflation can be classified into two, namely inflation from inflation in the country and overseas. Inflation comes from the country to be the case due to budget deficits financed by printing new money and market failures that result in food prices to be expensive. Meanwhile, inflation from abroad is inflation that occurs as a result of rising prices of imported goods. This could happen due to the cost of producing goods overseas height or an increase in import tariffs of goods.
Inflation can also be divided based on the amount of coverage of the effect on prices. If the price increase happens only with one or two specific items, inflation is called inflation closed (Closed Inflation). However, if the price increases occurred in all goods in general, inflation is referred to as an open inflation (Open Inflation). Whereas if inflation so great that attacks all the time constantly changing prices and increased so that people can not hold money longer value for money continues to decline due to so-called runaway inflation (hyperinflation).
Based on the severity of inflation also can be distinguished:
Mild inflation (less than 10% / year)
Inflation is moderate (between 10% to 30% / year)
Inflation weight (between 30% to 100% / year)
Hyperinflation (over 100% / year)
Inflation has both positive and negative effects depending on whether or not severe inflation. If inflation is mild, it has a positive effect in terms of stimulating the economy could be better, which is to increase the national income and get people excited to work, save and invest. Conversely, in a period of severe inflation, which in the event of uncontrolled inflation (hyperinflation), the state of the economy into chaos and felt sluggish economy. People become excited about work, savings, or investments and production as prices rise rapidly. The fixed income earners such as civil servants or private employees, and the workers will also be overwhelmed bore and offset the price so that their lives are wasting away and fell from time to time.
Here is the positive impact of inflation on the economy
1. Circulation / turnover faster.
2. Production of goods increases, as employers increase profits.
3. Employment opportunities increase, due to additional investment.
4. Nominal income increases, but the real reduced, because kenaikanpendapatan small.
The negative impact of inflation on the economy
1. Prices of goods and services rose.
2. Values and beliefs about money going down or reduced.
3. Raises speculation measures.
4. Many development projects stalled or abandoned.
5. Reduced public saving awareness.
Here are the parties who benefit from inflation:
a. The entrepreneur, who at the time before inflation, already has stock / stock production of goods ready for sale in large quantities.
b. The traders, who used the occasion plays inflation item price. How it is used to raise the price, because they want to profit / benefit.
c. The speculators, the persons or entities who held speculation, hoarding of goods by as much as possible before the onset of inflation, and sell it back on when inflation occurs, resulting in the increase of their prices are very favorable.
d. The borrower, since the loan was taken before the prices of goods go up, so that its real value is higher than after inflation occurs, but the borrower pay back the equipment in accordance with an agreement made before the inflation. For example, mortgage credit decision before inflation resulting BTN prices of building materials and home mortgage BTN rose, while the number of installments to be paid to the BTN still does not come raised.
While the aggrieved parties among others:
a. The consumer, having to pay higher prices, so that goods obtained less when compared to the prior occurrence of inflation.
b. Those whose income is fixed, as with a regular income, rising prices of goods and services, resulting in the amount of goods and services can be purchased a little more, so that real income is reduced, while the increase in income, or income in the event of inflation can hardly be expected.
c. The contractor or contractors, because they have to expend additional fee to cover expenses resulting from inflation and result in reduced benefits arising from the project is done.
d. The lender / creditor, because the real value of the loan has been granted become smaller as a result of inflation. For example, before inflation, borrowing Rp 500.000,00 = 25 grams of gold, after inflation = 20 grams of gold.
e. Savers, because when inflation interest earned from savings felt smaller when compared to the price increases that occurred. In addition, due to rising prices of goods and services, the value of the saved money to lower / down, when compared to before the inflation.
But the government also has certain ways to tackle inflation. These methods include:
1. Monetary Policy
Diskoto Politics (Political money is tight): bank raised interest rates so that the money supply can be reduced.
Open market policy: the central bank sells bonds or securities to the capital market to absorb money from the public and the central bank sells securities to suppress growth of the money supply so that the money supply can be reduced and the rate of inflation may be lower.
Improved cash ratio: Raise cash reserves in the bank so that the amount of money banks can lend to customers / public to be reduced. This means it can reduce the amount of money in circulation.
2. Fiscal Policy
Organize receipts and expenditures. Government spending that does not add to the budget deficit is not.
Raise taxes. By raising taxes, consumers will reduce their consumption as part of their income to pay taxes.
3. Non Monetary Policy
Encourage employers to raise their production.
Pressing the wage rate.
Government oversight and at the same price set maximum prices.
The government made the distribution directly.
Poverty is severe inflation (hyper inflation) reached by way of doing sneering (cutting of the currency). Senering This has been done by the government in the 1960's when inflation reached 650%. The government cut the value of the currency denominations of Rp. 1000.00 to Rp. 1.00.
Policies related to output. The increase in output can reduce the rate of inflation. The increase in the number of outputs can be achieved for example by reduction of import duty policy that imports tend to increase. Increasing the number of goods in the country tends to lower the price.
Pricing policies and indexing. This is done by determining the ceiling price.
4. Real Sector Policies
Government to stimulate banks to give more specific credit to MSMEs (Micro, Small and Medium Enterprises). Examples BRI bank launched this year as Microyear.
Pressing the flow of imported goods by raising taxes.
Stimulate people to use domestic products.
While inflation could be positive or negative, on the Indonesian economy, but it would be nice if the economic situation in Indonesia remains stable. So no one can get double benefits, while others experienced economic slump. Inflation prevention should be done as soon as possible before the bad inflation. Required skills in observing the government's economic conditions that occur at this time. Coupled with the lifestyle of the people of Indonesia tend consumptive. Not infrequently it lead to inflation. Hopefully someday Indonesia's economy could be better and will not cause gaps community.
http://wartawarga.gunadarma.ac.id/2011/03/httptwentytwopm-wordpress-com/
Since the advent of money as a medium of exchange authorized the presence of money has a crucial role in every human life. This can be proven from how every human being in need of money as a medium of exchange for goods and services required to fulfill his life, as an example, is how we need the money to finance health care, insurance, education, entertainment fulfilling the needs of everyday life and examples others can be found in everyday behavior. Apart from the need for money then on the other hand there are other aspects of the money itself that is inflation.
Inflation is defined as an increase in the overall prices of goods and is usually measured by the consumer price index. From the definition of the concept of inflation is reflected in that only occur when there is increase in goods as a whole and not just some stuff just so that if there is inflation, the value of the purchasing power of money will be drained owned or reduced because of rising prices of goods. Based on previous understanding crystallized that inflation has negative aspects and needs to be maintained at a certain level (2% -3%), but also has the benefit of actual inflation (oportunity) seen from the perspective of international finance as it relates or related to or a negative surplus of the balance of trade so writing This purpose is to explore the positive and negative inflation on the trade balance.
One item of the balance of payments is heading the trade balance comprising two subpost ie exports and imports. Further that the export and import element is an element that is crucial for the calculation of GDP (gross national product). Inflation can largely resulting from excess demand over supply or caused by the increase in the cost of the encouragement. But regardless of the cause of inflation is contained implicitly meaning that inflation is a challenge and an opportunity, which is a challenge because it takes the help of the government by playing two instruments, namely monetary policy, by raising the rank of interest and withdraw the money supply to the hands of the people so that it will be an adjustment price (invisible hand) and fiscal policy is to raise taxes to reduce revenue and profit as well as going on the invisible hand, while saying the opportunity as it relates to favorable exchange rates and exports.
As said at the beginning that inflation has a negative aspect as it will deplete the purchasing power of money owned so much allows people to save money on financial institutions because the government will respond by raising interest rates and favorable customer manabung financial institutions. Another aspect of inflation that would lead to fluctuations in exchange rates and stock prices overall. Or in other words that inflation will lead to increased corporate costs (direct material costs, direct labor costs and overhead costs) that affect the company's operating profit and if a company has a high leverage it will drain a net profit after tax. With rising costs, the company will then automatically raise the price of products and services to maintain its profits and if persists in the short and long term it will increase the probability the buyer to move to a competitor and this information will be circulated widely and affect investor perception that the firm's current performance and outlook is not good so it will respond by releasing shares held and there was a correction in the stock price.
Further worsening the perception that the investors and affect a particular stock index (JCI), the decline will affect the perception of foreign investors about the prospects of the company's performance in the future and the impact on the action release domestic company stocks and the rupiah exchange from the sale of shares with dollars and lead to increased demand for the dollar and ended the strengthening dollar and weakening rupiah. But despite some negative effect of inflation, the existence of inflation also has a chance if they can be put to good use and as stated earlier the chances of inflation is closely related to aspects of export and import.
Reasoning positive impact on exports and imports inflation occurs because when the increase in the price of goods to be exported then the domestic currency tends to depreciate so that the price of goods for export tend to be cheaper, but it requires several conditions must be met: (1) input costs to produce these goods have a low proportion of imports or production inputs obtained from a domestic and a few are derived from imports, (2) the current exchange rate shocks as inflation then companies have a fleet of good marketing and sales . To clarify the understanding of these two terms is then presented as an example below.
"Initial conditions before the shock rate the selling price of goods A of Rp5000 per product rate Rp5000 / $ and if there rupiah depreciation to Rp10000 / $ and if the company is able to maintain the selling price Rp5000 the selling price of the dollar change of $ 1 per product to $ 0.5 per product. This example looks simple but when these two conditions are met then the company will not experience increases in costs that affect operating profit and sales force and marketing still exist then the demand can still be obtained and profitable profits to be obtained ".
Examples and explanations in the previous section looks simple because it is excluding taxes and other relevant costs into the analysis, but apart from that it is still there because of its relevance as it is known that the cost element has a vital role in acquiring a profitable sale in the condition that the company inflasipun companies could still exist as long as the company does not have a dependency on imported inputs or raw materials but instead received input or raw materials from domestic and to achieve this it is necessary to support the government specially for the proper management focus and true will and support of all domestic agricultural institutions and communities to optimize domestic agriculture and long-term impact on the competitive advantage of the Indonesian state.
Inflation can be caused by two things, namely pull demand (excess liquidity / currency / medium of exchange) and the second is the insistence of production and distribution (including the lack of production and lack of distribution). For more affected first because of the role of the state in monetary policy (Central Bank), while the second is more affected because of the role of the state in which the policy executor in this case held by the Government, such as fiscal (taxation / levies / incentives / disincentives), infrastructure development policy , regulation.
Based on its origin, inflation can be classified into two, namely inflation from inflation in the country and overseas. Inflation comes from the country to be the case due to budget deficits financed by printing new money and market failures that result in food prices to be expensive. Meanwhile, inflation from abroad is inflation that occurs as a result of rising prices of imported goods. This could happen due to the cost of producing goods overseas height or an increase in import tariffs of goods.
Inflation can also be divided based on the amount of coverage of the effect on prices. If the price increase happens only with one or two specific items, inflation is called inflation closed (Closed Inflation). However, if the price increases occurred in all goods in general, inflation is referred to as an open inflation (Open Inflation). Whereas if inflation so great that attacks all the time constantly changing prices and increased so that people can not hold money longer value for money continues to decline due to so-called runaway inflation (hyperinflation).
Based on the severity of inflation also can be distinguished:
Mild inflation (less than 10% / year)
Inflation is moderate (between 10% to 30% / year)
Inflation weight (between 30% to 100% / year)
Hyperinflation (over 100% / year)
Inflation has both positive and negative effects depending on whether or not severe inflation. If inflation is mild, it has a positive effect in terms of stimulating the economy could be better, which is to increase the national income and get people excited to work, save and invest. Conversely, in a period of severe inflation, which in the event of uncontrolled inflation (hyperinflation), the state of the economy into chaos and felt sluggish economy. People become excited about work, savings, or investments and production as prices rise rapidly. The fixed income earners such as civil servants or private employees, and the workers will also be overwhelmed bore and offset the price so that their lives are wasting away and fell from time to time.
Here is the positive impact of inflation on the economy
1. Circulation / turnover faster.
2. Production of goods increases, as employers increase profits.
3. Employment opportunities increase, due to additional investment.
4. Nominal income increases, but the real reduced, because kenaikanpendapatan small.
The negative impact of inflation on the economy
1. Prices of goods and services rose.
2. Values and beliefs about money going down or reduced.
3. Raises speculation measures.
4. Many development projects stalled or abandoned.
5. Reduced public saving awareness.
Here are the parties who benefit from inflation:
a. The entrepreneur, who at the time before inflation, already has stock / stock production of goods ready for sale in large quantities.
b. The traders, who used the occasion plays inflation item price. How it is used to raise the price, because they want to profit / benefit.
c. The speculators, the persons or entities who held speculation, hoarding of goods by as much as possible before the onset of inflation, and sell it back on when inflation occurs, resulting in the increase of their prices are very favorable.
d. The borrower, since the loan was taken before the prices of goods go up, so that its real value is higher than after inflation occurs, but the borrower pay back the equipment in accordance with an agreement made before the inflation. For example, mortgage credit decision before inflation resulting BTN prices of building materials and home mortgage BTN rose, while the number of installments to be paid to the BTN still does not come raised.
While the aggrieved parties among others:
a. The consumer, having to pay higher prices, so that goods obtained less when compared to the prior occurrence of inflation.
b. Those whose income is fixed, as with a regular income, rising prices of goods and services, resulting in the amount of goods and services can be purchased a little more, so that real income is reduced, while the increase in income, or income in the event of inflation can hardly be expected.
c. The contractor or contractors, because they have to expend additional fee to cover expenses resulting from inflation and result in reduced benefits arising from the project is done.
d. The lender / creditor, because the real value of the loan has been granted become smaller as a result of inflation. For example, before inflation, borrowing Rp 500.000,00 = 25 grams of gold, after inflation = 20 grams of gold.
e. Savers, because when inflation interest earned from savings felt smaller when compared to the price increases that occurred. In addition, due to rising prices of goods and services, the value of the saved money to lower / down, when compared to before the inflation.
But the government also has certain ways to tackle inflation. These methods include:
1. Monetary Policy
Diskoto Politics (Political money is tight): bank raised interest rates so that the money supply can be reduced.
Open market policy: the central bank sells bonds or securities to the capital market to absorb money from the public and the central bank sells securities to suppress growth of the money supply so that the money supply can be reduced and the rate of inflation may be lower.
Improved cash ratio: Raise cash reserves in the bank so that the amount of money banks can lend to customers / public to be reduced. This means it can reduce the amount of money in circulation.
2. Fiscal Policy
Organize receipts and expenditures. Government spending that does not add to the budget deficit is not.
Raise taxes. By raising taxes, consumers will reduce their consumption as part of their income to pay taxes.
3. Non Monetary Policy
Encourage employers to raise their production.
Pressing the wage rate.
Government oversight and at the same price set maximum prices.
The government made the distribution directly.
Poverty is severe inflation (hyper inflation) reached by way of doing sneering (cutting of the currency). Senering This has been done by the government in the 1960's when inflation reached 650%. The government cut the value of the currency denominations of Rp. 1000.00 to Rp. 1.00.
Policies related to output. The increase in output can reduce the rate of inflation. The increase in the number of outputs can be achieved for example by reduction of import duty policy that imports tend to increase. Increasing the number of goods in the country tends to lower the price.
Pricing policies and indexing. This is done by determining the ceiling price.
4. Real Sector Policies
Government to stimulate banks to give more specific credit to MSMEs (Micro, Small and Medium Enterprises). Examples BRI bank launched this year as Microyear.
Pressing the flow of imported goods by raising taxes.
Stimulate people to use domestic products.
While inflation could be positive or negative, on the Indonesian economy, but it would be nice if the economic situation in Indonesia remains stable. So no one can get double benefits, while others experienced economic slump. Inflation prevention should be done as soon as possible before the bad inflation. Required skills in observing the government's economic conditions that occur at this time. Coupled with the lifestyle of the people of Indonesia tend consumptive. Not infrequently it lead to inflation. Hopefully someday Indonesia's economy could be better and will not cause gaps community.
http://wartawarga.gunadarma.ac.id/2011/03/httptwentytwopm-wordpress-com/
Since the advent of money as a medium of exchange authorized the presence of money has a crucial role in every human life. This can be proven from how every human being in need of money as a medium of exchange for goods and services required to fulfill his life, as an example, is how we need the money to finance health care, insurance, education, entertainment fulfilling the needs of everyday life and examples others can be found in everyday behavior. Apart from the need for money then on the other hand there are other aspects of the money itself that is inflation.
Inflation is defined as an increase in the overall prices of goods and is usually measured by the consumer price index. From the definition of the concept of inflation is reflected in that only occur when there is increase in goods as a whole and not just some stuff just so that if there is inflation, the value of the purchasing power of money will be drained owned or reduced because of rising prices of goods. Based on previous understanding crystallized that inflation has negative aspects and needs to be maintained at a certain level (2% -3%), but also has the benefit of actual inflation (oportunity) seen from the perspective of international finance as it relates or related to or a negative surplus of the balance of trade so writing This purpose is to explore the positive and negative inflation on the trade balance.
One item of the balance of payments is heading the trade balance comprising two subpost ie exports and imports. Further that the export and import element is an element that is crucial for the calculation of GDP (gross national product). Inflation can largely resulting from excess demand over supply or caused by the increase in the cost of the encouragement. But regardless of the cause of inflation is contained implicitly meaning that inflation is a challenge and an opportunity, which is a challenge because it takes the help of the government by playing two instruments, namely monetary policy, by raising the rank of interest and withdraw the money supply to the hands of the people so that it will be an adjustment price (invisible hand) and fiscal policy is to raise taxes to reduce revenue and profit as well as going on the invisible hand, while saying the opportunity as it relates to favorable exchange rates and exports.
As said at the beginning that inflation has a negative aspect as it will deplete the purchasing power of money owned so much allows people to save money on financial institutions because the government will respond by raising interest rates and favorable customer manabung financial institutions. Another aspect of inflation that would lead to fluctuations in exchange rates and stock prices overall. Or in other words that inflation will lead to increased corporate costs (direct material costs, direct labor costs and overhead costs) that affect the company's operating profit and if a company has a high leverage it will drain a net profit after tax. With rising costs, the company will then automatically raise the price of products and services to maintain its profits and if persists in the short and long term it will increase the probability the buyer to move to a competitor and this information will be circulated widely and affect investor perception that the firm's current performance and outlook is not good so it will respond by releasing shares held and there was a correction in the stock price.
Further worsening the perception that the investors and affect a particular stock index (JCI), the decline will affect the perception of foreign investors about the prospects of the company's performance in the future and the impact on the action release domestic company stocks and the rupiah exchange from the sale of shares with dollars and lead to increased demand for the dollar and ended the strengthening dollar and weakening rupiah. But despite some negative effect of inflation, the existence of inflation also has a chance if they can be put to good use and as stated earlier the chances of inflation is closely related to aspects of export and import.
Reasoning positive impact on exports and imports inflation occurs because when the increase in the price of goods to be exported then the domestic currency tends to depreciate so that the price of goods for export tend to be cheaper, but it requires several conditions must be met: (1) input costs to produce these goods have a low proportion of imports or production inputs obtained from a domestic and a few are derived from imports, (2) the current exchange rate shocks as inflation then companies have a fleet of good marketing and sales . To clarify the understanding of these two terms is then presented as an example below.
"Initial conditions before the shock rate the selling price of goods A of Rp5000 per product rate Rp5000 / $ and if there rupiah depreciation to Rp10000 / $ and if the company is able to maintain the selling price Rp5000 the selling price of the dollar change of $ 1 per product to $ 0.5 per product. This example looks simple but when these two conditions are met then the company will not experience increases in costs that affect operating profit and sales force and marketing still exist then the demand can still be obtained and profitable profits to be obtained ".
Examples and explanations in the previous section looks simple because it is excluding taxes and other relevant costs into the analysis, but apart from that it is still there because of its relevance as it is known that the cost element has a vital role in acquiring a profitable sale in the condition that the company inflasipun companies could still exist as long as the company does not have a dependency on imported inputs or raw materials but instead received input or raw materials from domestic and to achieve this it is necessary to support the government specially for the proper management focus and true will and support of all domestic agricultural institutions and communities to optimize domestic agriculture and long-term impact on the competitive advantage of the Indonesian state.
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