Why don't we talk a little bit about inflation...Inflation is the increase in the price of goods and services over time. Inflation causes your buying power to erode, meaning that the same dollar today buys less in the future.
1. Demand-pull inflation
Demand-pull inflation happens when the demand for certain goods and services is greater than the economy's ability to meet those demands. When this demand outpaces supply, there's an upward pressure on prices — causing inflation.
2. Cost-push inflation
Cost-push inflation is the increase of prices when the cost of wages and materials goes up. These costs are often passed down to consumers in the form of higher prices for those goods and services.
Cost-push inflation is the increase of prices when the cost of wages and materials goes up. These costs are often passed down to consumers in the form of higher prices for those goods and services.
3. Increased money supply
Increased money supply is defined as the total amount of money in circulation, which includes cash, coins, and balances and bank accounts according to the Federal Reserve. If the money supply increases faster than the rate of production, this could result in inflation.
Increased money supply is defined as the total amount of money in circulation, which includes cash, coins, and balances and bank accounts according to the Federal Reserve. If the money supply increases faster than the rate of production, this could result in inflation.
4. Devaluation
Devaluation is downward adjustment in a country's exchange rate, resulting in lower values for a country's currency.
Devaluation is downward adjustment in a country's exchange rate, resulting in lower values for a country's currency.
5. Rising wages
Rising wages is exactly what it sounds like — an increase in what's being paid to workers. "Wages are a cost of production," adds Baker. "If wages rise a large amount, businesses will either have to pass the cost on, or live with lower margins. The exception is if they can offset wage growth with higher productivity."
Rising wages is exactly what it sounds like — an increase in what's being paid to workers. "Wages are a cost of production," adds Baker. "If wages rise a large amount, businesses will either have to pass the cost on, or live with lower margins. The exception is if they can offset wage growth with higher productivity."
6. Policies and regulations
Certain policies can also result in either a cost-push or demand-pull inflation. When the government issues tax subsidies for certain products, it can increase demand. If that demand is higher than supply, costs could rise.
Certain policies can also result in either a cost-push or demand-pull inflation. When the government issues tax subsidies for certain products, it can increase demand. If that demand is higher than supply, costs could rise.
What is currently happening in our country?
- Covid has caused less production
- People not working has caused less production
- Stimulus money has created more demand
- We have rising wages with less production
- We have increased costs from less production
- We have stopped producing the oil that we need, creating a shortage of supply
There are only a couple of ways to stop inflation...
ONE - take money out of the marketplace by increasing the interest rates and increasing individual taxes
TWO - increase production by hiring more workers... but, if the workers don't want to work that is a problem. Also, production increases must be greater than wage increases.
THREE - decrease government spending so that overall demand will decrease.
THE QUESTION THAT YOU MUST ASK YOURSELF IS WHAT IS THE BIDEN ADMINISTRATION DOING?
1. They are increasing the corporate tax rate to 15% which will cause businesses to hire fewer people and fewer products will be created.
2. They are increasing spending by investing money into our GREEN ENERGY FUTURE... this will increase demand for goods and services causing them to cost more.
THIS IS NOT THE SMART THING TO DO...
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