As inflation rises, every dollar you own buys a smaller percentage of a good or service. If increasing the money supply causes inflation in the long run, why does the Federal Reserve choose to do so? What are some ways for individuals to avoid this loss of value while saving for their retirement?

Inflation is defined as a sustained increase in the general level of prices for goods and services. You usually see it quoted as an annual percentage increase. One of the functions of money is that it is a store of value. Inflation hurts the value of the money you save. As inflation rises, every dollar you own buys a smaller percentage of a good or service. If increasing the money supply causes inflation in the long run, why does the Federal Reserve choose to do so? What are some ways for individuals to avoid this loss of value while saving for their retirement?

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