Topic: Off Economic phenomenon. - page 2. (Read 489 times)

You did not even told us the name of your country so we cannot asses the whole situation with such little data, however even then it seems you are under the impression that such thing can be easily solved, but this is not possible, economic problems in a country are often the result of decades of mismanagement, and in order to solve those issues decades are needed as well, and that is if we were to assume politicians decided to do things right this time around for such a long period of time, an unlikely possibility without a doubt.

That's the wrong mindset, we pay our taxes to the government so technically we have a say on what to do with the gathered taxes, which means that it's our right to get what we deserve and that the government is obligated and it's their responsibility to comply to this things that we ask, yes you can't depend all of your needs to them but if they're not looking out for you, there's either something wrong with you and the people around you or the government or both, that's the excuse of many people that don't like the idea of handouts by the government to those that need the money, that they shouldn't be relying on them when that's what the people that controls us wants, that we turn on each other and make it so that they're giving out less help and they can further improve their legacy as a government officials.

Economic hardship is a global problem but each country problem is unique and different from others countries for instant your country economic situation may be due to lack of production of local goods and services if your country depends entirely on import and don't produce the basics house hold goods for her citizens the currency of that country will suffer in the hand of the dollar you have to produce and and become self sufficient then you export to others countries
Secondly you have to look at the leaders of your country if the economic decisions they are taking is friendly to economic growth or not because there are leaders who doesn't know anything called economy such as African countries leaders in that case the economy will suffer

The reason while other countries are doing better than others  is as a result of some countries not having love amogs themselves. Because love is one important thing in what ever thing we do. When there is love, people leave in peace and harmony and becomes productive. but when there is no love amog people, the country becomes devided. If you check Some best countries to, you will discover that it was oneness and unity that made them become a better country today without minding ethnicity, religious disputes, political crisis and many others. If they can be able to unit and forget about all that, I believe things will be ok.

It's easier for you to say all of this in paper than in practice under such dilapidation that an economy is experiencing.

How do you as a single individual thrive in a country that group's of private companies and industries are struggling to survive the continuous economic hardship forcing them to close business operations because they could no more meet up with cost of operation. How does a single individual survive it if they the companies are finding it hard to?

How do you as an individual depends on yourself for your own security in a social contract society when those saddled with political system has failed on their responsibility to protect lives and property. How can you as an individual survive under an insecure environment even if you are with entrepreneurial skills that should provide you a sustainable income source?

When the cost of goods getting increasing regularly following with constant devaluation of your country's currency value, how do you depend on yourself to survive under an economy like that if you don't have to depend on the government to solve and bring sustainable developmental solutions to these economic hardships?

Please @dunamisx brief me on practical ways as an individual without depending on the government how you can be dependent on yourself to survive sustainably under such a dwindling economy that's also bedeviled with gross insecurities.

I already read that you are from Nigeria, which is funny because I thought you were from Argentina where something similar happened recently, although only if we consider the "market" exchange rate (both legal and illegal) and not the officially controlled market which is difficult to access for buyers and thus has a lower price.

But as you asked for experiences from other countries: In the case of Argentina, the reasons of a decrease in the "real" USD/ARS exchange rate combined with an increase of the price level were varied but all were related to a government change:

- Before the decrease, price controls were in action. These were lifted by the new gov, giving freedom for companies to increase prices.
- A devaluation happened in late 2023 just before this phenomenon, which created an inflation shock for imported goods. But since then the government has barely touched the "official" exchange rate.
- At the beginning of the new administration there was uncertainty about the path the government would take. This drove USD/ARS "market" exchange rate to the moon, but then after first actions were taken, it fell.
- New government's measures have caused a recession; many people and companies had to sell dollar/forex reserves. This deflated the USD/ARS "market" exchange rate further.
- Inflation "inertia" was (and is) still in place, i.e. speculation about future price and wage increases didn't change.

All of these phenomenons were completely local, but they could happen in any country. The interesting thing in this case however was that these forces were so strong that they even countered a decrease of interest rates, which had risen to astronomical heights in 2023 (over 100%).

How could be "dealt with that"? The idea of the government is that a new equilibrium would be found between inflation, the USD/ARS exchange rate, and interest rates, creating conditions to retake economic growth, allowing basically an already-existing recession to deepen to stop inflation. But the problem is that much of these phenomenons have side-effects: For example, too many companies closing due to recession can lead to an exodus of skilled people and the reduction of economic diversification (need for more imports), which affects growth potential. Measures of this kind aren't "free". They can work, but also can not. To see if Argentina is a good example how to deal with such phenomena we must wait some months (or years) more.

Inflation is a global issue right now, though the situation is worse in some countries than others. Nigeria has quite a lot of problems with debt, lack of local production/exports, mismanagement of public funds/taxpayers money and really bad economic policies, and the government are only chasing temporary reprieve to all of these and more.

I don't think inflation can be "resolved" (to use your own words), though the government can take better decision to lower the rate of inflation, and unless they tackle the problem from the root, it would be futile or only produce respite.

At the end of the day, US economic policy will take into consideration all the external countries that rely on the dollar for trade (to keep it as the global reserve currency) but they first have a commitment to making the lives of American's better. That is why countries that rely on the dollar, often through unofficial or black market trade, will feel consequences from the US central bank. The one thing that is going on right now - investors are always looking to find decent returns without too much risk, for the low volatility part of their portfolio, and times have never been better to get that low risk debt from US government bonds paying close to 5%. If you imagine before the recent global inflation problems it was sub 2%, you can see why investors are piling in there and out of other less stable countries

I did not realize the situation in Nigeria is that bad, I read an article --> Why Nigeria's economy is in such a mess After reading the article I got some idea that you are oil making nation when I read it, I got only one question, why a nation which is the 2nd largest oil generating in the whole Africa is suffering. According to some statistics, your exports have improved in comparison to previous years.

With that saying, why money is not being made, would be due to many problems, like low-level education, people with no risk taking, money making, optimistic mindsets, but if the situations are bad then these are not going to be the ones that lack, the only thing that lacks is leadership and opportunities, they are giving to you, if not then you guys have to be independent of the government, learn new skills, join technology, provide services and start to earn money in $. Our country's situation is also very bad, the prices of everything have gone 2x to 3x in a few years. We have a hell lot of $ as debt on us. last time we were near to declared as default. We have riots among the political leader and they only work for money.

Things are difficult and in this situation many Pakistanis are flying abroad, earning in dollars and helping others too, some are becoming entrepreneurs and producing more employments, people are helping each other, this can solve some things. Overall, who is at fault, that's hard to know.

The government is not doing the right thing. Instead of thinking how to tackle inflation by repairing the refineries, and focus more on production in the country to lessen the right of inflation, they put the blame on the value of dollar over Naira. This has shown that they are not competent of the offices that they are handling.

The government should focus more on production and exportation, rather than importing almost everything that is used in the country. I believe the the Naira value would be in a short-term, because nothing is done to tackle the high level of inflation by the government.

I would believe we are from the same country because same situation you talked about are what my country face right now. The Naira which is the Local currency of my country was really fall compared to naira and was heading towards ₦2000 for $1 which is super crazy causing the price of goods and services to sky rocket leading to hardship in the country.
This situation is as a result of bad government with not strategy to handle the nation economy, to make matter worse the country decided to target Binance seeing it as the cause of the Naira Falling.

I think the situation is bad even if we are now seeing temporary progress in the value of Naira but not reflecting in the price of goods and services.

If there are regulations to subsidize the high exchange rate, then there should also be regulations on price control, but In a situation where there are only regulations to reduce rates and the aspect of price control is overlooked by the government, producers, wholesalers, and retailers will definitely sell as they desire. In the open market of retailers, prices might not really be properly managed, but from producers to retailers, if there are regulations for price control, it would help the retailers buy cheaper from their suppliers, which would enable them to sell at a less expensive rate to final consumers. 

So, what I am trying to let you know is that the exchange rate can be reduced, but when nothing is done to control the price of goods and services from the channel of distribution, it definitely will not reduce the price of goods, and the cost of living will not still look satisfying because everything that is needed to heal the inflation a bit has not been attended to. 

Dividend paying defensive stocks are the best inflation hedges imo.

First of all, they are defensive. Meaning they make products which people will always need and gonna buy. (Shampoo, toothpaste, toilet paper, water, drugs etc)

2- They can easily raise their prices, adjust them to the inflation rate and still sell their products without any problems. Meaning; they are recession-proof.

3- They pay dividends. Meaning; you’ll always have a cash income regardless of the financial situation in the world. It is important because we live in a cash world.

You can’t fix inflation. Nobody can. It is because these central banks are addicted to printing. However, You can protect yourself from it. It is not rocket science…

If you are not into stocks, buy bitcoin.

The exchange rate of naira to dollars is not the course of the economic hardship and the hyke in the price of goods and services within the country,  you should ask yourself this basic questions.

1: is the price of other trading currencies and assets not pricing above the dollars, e.g bitcoin for example is at above $68k+ and yet the United state government is not blaming bitcoin are they?

2: the problem relys much more on export rate against import rates?

Conclusion

Nigeria over dependence on  petroleum and importations of almost everything and low internal production of basic commodities is the major course of the hardship.

Now the naira is appreciating against the United state dollars, but yet the price of goods and services are still skyrocketing on daily basis.

This happens when the country is dependent on imports as over importing or importing more than export will cause the issue you have mentioned and if the export is increased the country will see more wealth flowing in thus reducing the inflation as well, you country needs more made in your country product it has to become a manufacturing hub for most of the daily needs and this is possible only when government incentivize some SME businesses and have incubation program for start ups.

This is not possible with corrupt leaders as they should be kicked out in first place to move towards progressiveness. 

Currently, most of the countries are into high inflation and the first world countries are dealing with recession. That's why the decrease in value of your fiat is there if your country is dependent on the value of USD or importing a lot. There's no way to stop inflation but it can be lessened and decreased yearly depending on many factors like as I've said, if your country has always been importing, it's hard to deal with it. But those countries that have food security and not reliant to the oil of other countries, then that means that they're making their own supply and economies for which they can't be affected by the rising factors of importation.

The economic situation would not have been affected by this crisis if there was less corruption. An unbridled trend of corruption has been observed in the last few years. Especially in various government projects repeated increase in project cost various irregularities unlimited corruption have eaten a large part of the growth of the country's economy. If corruption was less then the situation of the country could be different.

Honestly it's hard to pin point just one main or primary cause of an economic recession in a country. It is rather a chain of events leading one to another making the economic situation worse. If there are increase in the price of raw materials and the government not being able to do anything to prevent it it will be soon followed by an inflation period which in turn makes people hold on to their money more in fear of losing money but that will lead to a decrease in consumer thus making businesses suffer and in result will act on cutting employees leading to a loss of jobs. It all depends on a country and their strengths and weaknesses but this is generally how I understand economic recession happen.

These problems usually affect developing countries more.  A rise in the value of the dollar in developing countries has led to a depreciation of their currency and inflation.  Which has made their public life endangered and causing various problems such as increase in commodity prices.  People spend more than their income.  Inflation seems to be killing off these low-income countries.  They are unable to keep pace with the global market.

Cuba is one of the country that is facing unstoppable inflation due to the restrictions of US government, it is still on going so it's not possible what they did to stop the crisis but the increase of US dollars into the country helped the crisis a bit that also let the people to get what they wanted with their money but it's not possible for everyone, only who had the money even in the crisis can survive and others just have to stare at the government schemes to run their life.