What do you think are the biggest negative social and economic impacts of double-digit and currently rising inflation?
Central banks are raising interest rates in an attempt to contain rising inflation, to curb the rise in inflation and, in the next quarters or perhaps years, to bring inflation down to a low single-digit level, to the inflation target of monetary policy. However, commercial banks are raising interest rates on deposits and bank deposits to a limited extent. Interest rates on new government bond issues are also rising slowly. By contrast, interest rates on bank loans offered by commercial banks are rising much faster. The rising cost of money causes a decline in lending of mortgages, business loans, consumer loans, etc. The rate of economic growth is falling. Enterprises ai companies are holding back on new investments. Repayment instalments on long-term loans that have been granted at a variable interest rate are rising. Financial risks are increasing, including credit risks, liquidity risks, debt risks, and the profitability of production processes is falling. The risk of a significant rise in unemployment and the emergence of stagflation in 2023 is emerging. The scale of social unrest in many countries around the world is increasing. In addition, the economic downturn is being exacerbated by rising energy and fossil fuel prices, i.e. the currently developing energy crisis.
In view of the above, I address the following question to the esteemed community of researchers and scientists:
In your opinion, what are the greatest negative social and economic impacts of double-digit and currently rising inflation?
What do you think about this topic?
What is your opinion on this subject?
Please respond,
I invite you all to discuss,
Thank you very much,
Regards,
Dariusz Prokopowicz
Ok, where this is going, when it will stop?
What is the answer for non pensioned, retired, jobless and dependants, where there is less or no social benefits.,
Digital manipulation of online offers, bookings and payments.
How long the concerned authorities are going to ride on the minorites,.
The laws of economics will prevail over political intrigue and power.Two-digit inflation only comes to an end with the advent of three‑digit inflation which signals the approaching demise of fiat credit money; the dreaded depression that was so long delayed in coming will finally make its entrance with irresistible force. Also consumers goods industries, in general, tend to contract throughout this period. After all, most consumers suffer losses of income and wealth and, therefore, are compelled to curtail the consumption of goods they deem least essential. Vacations may be postponed or at least shortened. Expenditures on entertainment, amusement, and other "luxuries" may be cut. There may even be reductions in the quality of essentials, such as food, clothing, and housing.
Inflation is often described as a tax on the money holders. In reality, it is a terrible instrument for the redistribution of wealth; inflation shifts wealth from those classes of society who are unable, or do not know how to defend themselves from the monetary destruction, to entrepreneurs and owners of material means of production. It decimates or destroys altogether the middle class of investors who own securities or hold claims to life insurance and pension payments.
This redistribution process is also a massive debt liquidation process in real terms; a ten per cent rate of currency depreciation reduces real debt by ten per cent; total monetary destruction destroys debt totally. It transfers the ownership of real wealth from the people who have lent money to the people who have borrowed the money: inflation is a boon to the treasury but very dangerous for ordinary people.
In addition, several other inflation factors inflict huge losses on nearly all classes of society; it is not possible to predict which group will benefit from a particular period of inflation; continued inflation will finally end in the crack-up boom, the complete breakdown of the currency system.
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Continued inflation inevitably leads to catastrophe.
Ludwig Von Mises (1990). “Economic freedom and interventionism: an anthology of articles and essays”.
Double digit inflation is dreadful to the weaker sections of the society. In India, many employers have not increased salaries of its employees after Corona, imagine the situations of them.
Inflation generates by wrong use of resources by elite classes also. Why some rich people need to live in houses of hundreds of rooms?
Inflation does create problems for people on fixed money incomes and for unemployed people who have no access to government funded benefit that are inflation adjusted. However, the impact of Central Banks making big increases in interest rates is to lead to a possible recession with much larger increases in unemployment. There is no evidence for most countries that inflation leads to higher inflation. Hence, I think the US and many other western countries are moving too quickly in raising interest rates!
Raja Junankar
Inflation appears even before the increase in energy prices and even before the war on the territory of Ukraine. In order to counteract the effects of the debt crisis from 2010 and after that the effects of the pandemic crisis with COVID-19, ECB monetary policies were so abundant in providing money in the Eurozone. Now when inflation is high the ECB is increasing the interest rate by a small % (0.75). I think that ECB now is very cautious about the possible effects of this interest rate increase on the EU economies.
Dear Dariusz:
About negative impacts of inflation:
1)The most obvious impact of inflation is that it hurts your purchasing power.
2) Less savings
3) Inflation also lowers the values of pensions, savings, and Treasury notes
Also, variable interest rates on loans increase during inflation.
Best Regards
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