Definition of Biflation

What is inflation? What is the definition of inflation? What does the term inflation mean?

Inflation is a fairly unusual occurrence that occurs when both inflation and deflation are taking place simultaneously.

According to Wikipedia, the term "inflation" was coined by Dr. F. Osborne Brown back in 2002-03.

With inflation, certain assets increase in price due to high demand, while other assets drop.

The assets that increase in price are those that are commodity-based, such as food and energy. According to Dr. Brown, there is an "over-abundance" of money being injected into the economy by central banks, and much of this money is going towards commodity-based assets.

On the other hand, deflation is also occurring in a "deflationary" environment as consumers stray away from non-essential purchases and "debt-based assets." This would be expensive houses, equities, etc. The deflationary side would be caused by rising unemployment and decreased purchasing power.

Many people believe that the US is either in a deflationary environment right now or will soon find itself in one.

Example of Inflation

Unprecedented market events caused inflation to occur in the wake of the Great Recession of 2007–2009. Against a backdrop of high unemployment and a moribund housing sector, the Federal Reserve unleashed trillions of dollars in monetary stimulus to jump-start the economy while pledging to keep interest rates low.

To be sure, those measures aided parts of the economy, albeit not immediately across the board, rather than targeting the funding toward renewed lending to distressed businesses, banks, and Wall Street institutions who received the new money first held much of the funding as cash or directed it into speculative asset classes. Housing prices eventually recovered, but not nearly as quickly as liquid assets, such as stocks, which attracted investors due to a recovery in corporate earnings fueled by low-interest rates.

The economy saw an ongoing decline in housing prices, which fell in many regions until early 2012. Conversely, gasoline prices rose from 2009 through 2012. The price of gold rose dramatically between 2009 and 2011, with growth slowing in 2012. Similarly, many other commodities markets saw rising prices over roughly the same period.