Topic: Risk of Inflation in Economy. (Read 1634 times)

Inflation risk is the opportunity that cash flows from investments will not be worth much in the future because of changes in purchasing power due to inflation.  Usually, this risk is taken by investors when holding cash.  In addition to fiscal and monetary policies, the government can also overcome inflation by increasing production output, facilitating the entry of imported goods, stabilizing people's income (wage levels), setting maximum prices, and monitoring and distributing goods.

And the problem for some countries, they can't cope up with increase with those things.

Yet the salary of a normal office person don't increase and it has to take a lot of board meetings before they give an increase even if everybody is dealt to inflation.

When prices for energy, food, commodities, and other goods and services rise, the entire economy is affected. Rising prices, known as inflation, impact the cost of living, the cost of doing business, borrowing money, mortgages, corporate, and government bond yields, and every other facet of the economy.

We should always be prepared for adverse situations. Intelligent people always take care to save a part of their earnings. This helps them in times of need. Even in my neighborhood, I am witnessing a lot of hardship as a result of the pandemic. Some people have even committed suicide, as they were unable to pay back their loans. The government should give some sort of psychiatric counselling as well. Suicide is not the solution for any of this. They need to understand that the business will be back to normal, once the pandemic is contained.

It is true that the situation for the past year has been very bad. People lose their jobs, financial difficulties and the level of basic needs are increasing. This makes us stressed and we must be good at managing our finances.
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 Yeah it's very difficult for the past years specially the pandemic was spreading along the country. It is really hard for the poor class status of people that they don't have a shelter to live, No work no pay, and specially to those people who did not finish their study the don't have a chance to get work that's the perspective of some company. More people sacrifice and suffered because they can not afford to buy food for their family so having  an inflation is difficult on us.

It is true that the situation for the past year has been very bad. People lose their jobs, financial difficulties and the level of basic needs are increasing. This makes us stressed and we must be good at managing our finances.

Inflation can be managed if the government can do their job well actually, of course, inflation is always a problem or issue that will never disappear in our economy, and it's really dangerous as well if we don't pay enough attention to it, but i believed that great policy, precise decision making from the government, and also a control from them can help to control and manage our inflation in low inflation. If it's already going to medium inflation, the government should already pay a lot attention to it and take actions, before it's going to hyperinflation or going out of control. However, sometimes our government are too neglectant, paying to other issue, or just care about their ownselves, corruption and many others. The risk of inflation will always be there, but it can be controlled.

- Basic demand products increase sharply in value as well as the tragedy of the period of Covid-19, reserves of money in countries as well as manufacturing industries have fallen into disrepair, the chaos can still be estimated to be mild but when this instability is not contained, quite a few disasters are going to happen and I think inflation is bound to happen. More money will be printed to help overcome the immediate rift, a little higher inflation can still be cut by policy but chaos will be war between domestic and foreign

The economic crisis caused by inflation shows the strength of the government's fiscal position. Inflation has deprived many people of their most basic needs and made people poorer.

But now many people will choose Bitcoin under the inflation crisis. Bitcoin's scarcity will not issue additional currency, so it can fight inflation.

  Risk of inflation of the economy is a big problem more people frustrated about on this problem. More poor family can't afford to buy their needs and wants they are vulnerable to this situation because some people had no degree and their salary is not enough for them to fed their families.

The solution to what you're saying in regards to inflation, it's that people should elect a smarter and competent government officials, increase the production of local products and reduce the importation of products that already exist in the local market, that's the only way to prevent being outrunned by inflation because it's inevitable, raw materials get expensive in the coming years.

There was a time, when the inflation rate in my country was above the 10% mark. It was difficult back then, as everyone was struggling to cover the surging expenses with limited salaries. But the big change occurred after 2014, when the crude oil prices crashed. The inflation slowed down to around 4% per year and stayed broadly at that level until 2020. But the honeymoon seems to be over now, as the inflation rate is once again going up (partly due to the rising crude oil prices). Consumer Price Index (CPI) was up by 6.3% (YoY) last month.

true , the case of inflation makes the poor poorer where they are required to pay taxes whose purpose is not clear which should not be those who are taxpayers, everything from health insurance to income taxes is increased, but we don't know whether the top officials pay taxes?

The increase in prices due to inflation occurs due to the influence of several factors. These factors trigger continuous price increases, resulting in inflation. The following are several factors that can be the cause of inflation that appears in the community;

1. The High Amount Of Demand For An Item

2. Increasing the amount of money in circulation

3. Production Cost Increase

Prolonged inflation has a negative impact on business and the economy. Therefore, it is necessary to find a way to overcome inflation so that it does not occur continuously. Here are some ways to overcome inflation so that business and the economy in society are better.

1. Doing Internal Cost Efficiency
One way to overcome inflation that can be done by business actors is to reduce internal costs. Ensuring that internal costs can run efficiently can reduce the company's burden. Some internal costs that can be regulated to be more efficient include electricity costs and administrative costs.

2. Reducing the Three Costs
There are three basic costs that are definitely incurred by the company: Production Costs, Operational Costs, and Marketing Costs. The occurrence of inflation can be caused by one, two, or even all three of these basic costs. Therefore, these three basic costs must be kept to a minimum.

3. Innovate and Variation
One way to deal with inflation that can be done by business actors is to innovate and make new variations. These new innovations and variations lead to an increase in the choice of products available in the community. With so many choices, people no longer hunt for the same product.

4. Raise the Price
Although inflation is related to price increases, it turns out that this price increase can actually be a way to overcome inflation for companies. This step can be used when other conditions are no longer possible to use.

If the government remains neutral, then the shale oil producers in the United States should be able to rapidly increase their production. Some of these producers are profitable at crude oil prices of $40 per barrel, while almost all of them would return profits at $60. And the current prices (WTI) are close to $70 per barrel. Ideally the shale oil producers should be rushing to restart their rigs, but they are not doing that for now. The OPEC has announced that 400k daily increase will be there from September onwards, and this should make sure that the price stays at ~$70 per barrel.

The energy prices don't have anything to do with Biden policies.  Keystone wouldn't be producing for years still and same with fracking on federal lands.  None of this impacted the current supply, so none of this impacted the current prices.  The prices are reactive to actual supply changes from OPEC, not policy decisions that would have changed supply 3-5 years from now.

How much further can they increase the taxes? Marginal income tax is already at a level higher than 50% in most of the developed nations. There is limited scope of an increase in tax revenue by increasing the income tax. It needs to come from other sources, such as capital gains tax and corporate tax. And the US is already moving in that direction. They have announced an increase in the corporate tax, and intent to tax long term capital gains tax at a rate which is on par with the income tax. But the question is, what they will do next time?

You have to understand that the US are by far in a better situation than many other countries. For example, the US will never be in the situation of being in default, as they will always be able to print more money to pay for their debt
Not so like in Europe, where debt of each contry is issued by different subject than the ECB, which controls the monetary level, while the fiscal leverage is enacted by each member state.
 

I feel confused by the current economic situation they are doing, actually it has nothing to do with me reviewing their policies, especially since I don't live in that country, but with their policies they actually hit the economy in a developing country like mine.  I don't know why and what is the problem in the minds of world leaders today.  Simultaneous conditions of tax and qe policies in the US will attract their investors who are in my country, not to mention the pressure in my own country which is no less bad.  During this pandemic, the government seemed out of control in debt.  Providing social assistance is only their alibi to owe a lot to other countries, the state continues to be burdened but the rulers are not burdened at all because their term of office is only 5 years, a maximum of 10 years.  But the state bears the amount of their debt for life and will continue to pass down from generation to generation.  Until the country goes bankrupt because the interest on debt is no longer counted.  Not only in the US but there are so many similar economic cases today, therefore crypto seems to be the answer, especially BTC to be a solution to this broken centralized economic system.

Don't forget taxes.
Taxing the rich to fund the government.

Ohh the irony.
Taxes and QE at the same time!
First you make the rich richer, and the poor poorer with QE: you distort the markets to favour those who can afford to invest in the financial markets, leaving the lower classes behind.
Then you tax the rich of the profit you allowed him to gain, only to repair the damages you did in the first place with QE!
Wunderbar!