What is inflation, exactly? The best definition I have found is this: The rising cost of goods and labor due to the expansion of the currency supply. What does this really mean? The US Dollar is not money, but rather a currency.
When the Federal Reserve “creates” more dollars with their printing presses and their computer entries, and those dollars get into circulation, inflation occurs. The value of your dollars goes down as the amount of dollars in circulation is increased. This is what some refer to as the hidden inflation tax. By the way, there is no line on your tax return to deduct this hidden, phantom tax.
There was a huge spike in inflation in the mid-to-late 1970’s. From what I gather, a large portion of this was due to government activity. They took us off of the gold standard in 1971 during the Nixon administration. They followed this with excessive printing of our currency.