Inflation, a dirty word for politicians and economists. Yet, it's on almost everyone's mind these days, including some distant villagers in China.
There have been many talks about this topic in the business world, be it from the academics, business leaders, employers, employees, real estate agents, or even children. Everyone knows inflation is an evil in one's life. It exists whether you like it or not. The point is you can't eradicate it, you can only hope to cope with it. The question then is, are you coping well under high inflationary environment?
The U.S. is attempting to export inflation to the entire world. Not only are Americans having to deal with inflation, the rest of the world has to deal with it even on a larger scale. Printing money as U.S. did the last two years have blown the problem of inflation out of proportion in the world. You do not have to know any economics to know this. Clearly, for all of us out there in the world, money is getting more and more worthless. How can it not be when Gold has reached a high of almost US$1400 an ounce now? When you go out shopping for groceries, they cost more and more and the same amount of money now brought home less food!
Many countries in Africa are dealing with inflationary rates which we hope we will never ever hear about. That appears to be just their problems, not ours. Or is that true? Is country which is not having low growth not dealing with it? Clearly NOT! Take for example, in Singapore and Hong Kong (and also China), the official inflation rate may appear normal, yet we all know rentals and real estates have skyrocketed to all time high and although business appear to be good, more and more people are feeling poor. A few rich are controlling what's happening in the country, as with the U.S.
I'm not for a socialist country, but when your country is drifting apart because the gap between the rich and poor is so big that almost 80-90% of people feel poor, then something clearly is very wrong, regardless of what the data says. When businesses that have been operating at a profit for last 10-20 years are closing down because they are no longer worth the effort of operating, then it is easy to foresee that this is the beginning of fallout between reality and sustainability. Governments need to find ways to deal with not only those who have and those who have nots, they also need to maintain a balance between the employed and the unemployed (be it due to circumstances or voluntarily). No, it is definitely not an easy issue to deal with, but the sooner the leaders deal with them and make difficult decisions, the better it is for the world. If not, it is not difficult to conclude that in near future, we will see strikes, disruptions and even social upheavals in many regions in the world. Having 90%+ of the population feel poor and unable to cope is a dangerous situation. Having 70% of the world feel hopeless, that's the real disaster of the century!
Considering the trend we are seeing now, with regard to assets and hot moneys floating in and out of different countries, exporting inflation by the Obama Administration is a very dangerous strategy. It will not work to the advantage of the American people, it will further harm the balance in the rest of the world. It is therefore not difficult to foresee that we will have troubles in very near future. Inflation is not a necessary evil; it is an evil which if not controlled will prove to be the downfall of men! The world is now in a precarious situation, should U.S. $ devalues around the world, be ready for bloodshed!
(This review is being nominated for Lunch Award! A BIG THANK YOU to everyone who nominated & voted!!!)
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In economics, inflation is a rise in the general level of prices of goods and services in an economy over a period of time. When the price level rises, each unit of currency buys fewer goods and services; consequently, annual inflation is also an erosion in the purchasing power of money – a loss of real value in the internal medium of exchange and unit of account in the economy. A chief measure of price inflation is the inflation rate, the annualized percentage change in a general price index (normally the Consumer Price Index) over time.
Inflation's effects on an economy are manifold and can be simultaneously positive and negative. Negative effects of inflation include a decrease in the real value of money and other monetary items over time; uncertainty about future inflation may discourage investment and saving, or may lead to reductions in investment of productive capital and increase savings in non-producing assets. e.g. selling stocks and buying gold. This can reduce overall economic productivity rates, as the capital required to retool companies becomes more elusive or expensive. High inflation may lead to shortages of goods if consumers begin hoarding out of concern that prices will increase in the future. Positive effects include a mitigation of economic recessions, and debt relief by reducing the real level of debt.
High rates of inflation and hyperinflation can be caused by an excessive growth of the money supply. Views on which factors ...