American inflation has grown epidemic over the past few decades. The price of crude oil rose from about $3.60 a barrel in 1971 (or $20.00 a barrel in today’s prices) to $71.21 a barrel in 2010. This reflects a slight recovery from the 2008 peak of $91.48, but rising prices in late 2011 are creeping back towards $87. Why do prices keep going up? What causes these continuous inflation rates? And what can be done to curb it? Here we will tackle these questions by first reviewing an understanding of what inflation is before we go on to consider its causes and what can be done about it.

The effects of trade deficit gaps reverberate throughout the U.S. economy, rippling through one sector to another in a wave of dominoes that ultimately impacts the consumer. The initial impact is felt by U.S. business, as the loss in sales to foreign competitors cuts into profits. From the business sector the effect radiates in two directions: to the government and to consumers.