Risk of Inflation in Economy.

[Iphomme]

That is what is worried if there's inflation in almost all parts of the world, it will be difficult for the economy to move
All sectors will inevitably have an impact, especially new started small businesses will certainly find it difficult to survive

Yes its really true regards the inflation towards the impact of an economy. A lot of risk and damages will happen when it is getting worst. Even the Micro and Macro have also experienced difficulties.

[Sithara007]

There's actually very little inflation in the economy right now.

What is very worrying is that people are expecting high inflation. And because of these inflationary expectations, you could have a self-fulling prophecy situation where inflationary expectations alone are able to lead to actual inflation in the future.

The quantitative easing and the myriad of fiscal stimuli are going to come at a cost, one way or the other. There is absolutely no way around that, although most policymakers still seem delusional about the potential consequences for some reason.

The impact of inflation won't be immediately visible. It will take some time for its effects to be noticed. Governments around the world are indulging in a cash splurge in the name of stimulus. At least in some occasions, this will leave a lot of money at the hands of people who don't need it. Obviously some of this money will be used to make investment, pushing up the prices of equities and bullion. And some will be spent on luxuries and services, which may otherwise would of low priority. Overall, the impact will start to get noticed in 2-3 years, and the full effect will take at least 5 years to get reflected in the market.

[fillippone]

I see the picture being very different from "developed economies" and "emerging economies". (Please allow me this rough separation for the sake of discussion).

• In the emerging economies, commodities prices constitute a problem. Rising food prices have a negative impact on disposable income, and pose a serious threat to the less robust categories in the population. This might cause economic, political and social problem in those countries.
• Rising commodity prices can change the competitive advantage of a nation compared to their peers, either for misalignments in prices, or because rising prices can hinder the convenience of a whole industry
• In developed countries  commodity-induced inflation has a lesser impact. Inflation we are currently witnessing is more due to a base effect due to the massive disinflation in last year, due to COVID. In the long term rising inflation must be accompanied by rise in real wages. Something is against the secular trend of the last 20 years.
• True, rise in monetary aggregates can destabilise the inflation, sending the currencies in a Zimbabwe-style (or Weimar) style depreciation. But this is ultimately a very difficult scenario to witness.

[Nunoluck]

Inflation is bad for customers but it is good for company. Inflation makes their products price rise. I am very lucky because know about bitcoin. Now, I can avoid fiat inflation. I invest some of my money in btc and altcoins. I hope we have tangible currency which is as good as gold. when I invest in bitcoin, I feel that I find a way out from unstoppable fiat inflation.

[Btcoin Casino Top]

Judging by the comments, most people think inflation is the worst thing that can happen in an economy. But if you get even a little familiar with such science as economics, then you suddenly find that inflation is a "natural" phenomenon. The question is how strong is it, 3-5% is okay but more than 10% isn't.

[bryant.coleman]

Judging by the comments, most people think inflation is the worst thing that can happen in an economy. But if you get even a little familiar with such science as economics, then you suddenly find that inflation is a "natural" phenomenon. The question is how strong is it, 3-5% is okay but more than 10% isn't.

Inflation is a relatively recent phenomenon. During the days of the gold standard, there was hardly any inflation. However, as most of the countries discarded the gold standard and started printing banknotes without any control, the inflation rate went up. It just confirms that inflation results from incompetence of the governments. When the government fails to balance out its budget, it is forced to print more and more cash to cover the gap. And this results in inflation.

[paxmao]

I see the picture being very different from "developed economies" and "emerging economies". (Please allow me this rough separation for the sake of discussion).

• In the emerging economies, commodities prices constitute a problem. Rising food prices have a negative impact on disposable income, and pose a serious threat to the less robust categories in the population. This might cause economic, political and social problem in those countries.
• Rising commodity prices can change the competitive advantage of a nation compared to their peers, either for misalignments in prices, or because rising prices can hinder the convenience of a whole industry
• In developed countries  commodity-induced inflation has a lesser impact. Inflation we are currently witnessing is more due to a base effect due to the massive disinflation in last year, due to COVID. In the long term rising inflation must be accompanied by rise in real wages. Something is against the secular trend of the last 20 years.
• True, rise in monetary aggregates can destabilise the inflation, sending the currencies in a Zimbabwe-style (or Weimar) style depreciation. But this is ultimately a very difficult scenario to witness.

All of the above are true, however the effects of these are not linear. An increase of inflation to 1% has little effect, a 2% is considered desirable and if it goes beyond 5% then the effects on the public spending and investment strategies changes drastically. The problem is not as much the effects, but that, like wars, you know how they start but not how to end them with a victory or without being annihilated. I am not very confident on the ability of our politicians to control.

[fillippone]

Inflation is bad for customers but it is good for company. Inflation makes their products price rise.

Inflation is bad for companies too.
Of course they can make the price of their product rise, but eventually this is not certain, or they get damaged on their wharehouse costs.

Generally speaking inflation is bad for savers, while is good for debt issuers.

And guess who's the biggest debt issuers of them all?

[ivankoh]

Inflation is bad for customers but it is good for company. Inflation makes their products price rise.

Inflation is bad for companies too.
Of course they can make the price of their product rise, but eventually this is not certain, or they get damaged on their wharehouse costs.

Generally speaking inflation is bad for savers, while is good for debt issuers.

And guess who's the biggest debt issuers of them all?

How many company benefit from inflation.  It probably won't.  When the product is selling at a high level, it means that other products will be appraised with demand.  Competition will increase.  They are willing to reduce competitive prices to be satisfactory for the agency, customers and consumers.  It is no longer a risk, it always happens.  It's just that you haven't received a balance sheet from the government.  The damn thing is happening with land prices in my country.  Inflation makes the distinction between rich and poor become clearer than ever.  All cannot be justification.

[Sithara007]

How many company benefit from inflation.  It probably won't.  When the product is selling at a high level, it means that other products will be appraised with demand.  Competition will increase.  They are willing to reduce competitive prices to be satisfactory for the agency, customers and consumers.  It is no longer a risk, it always happens.  It's just that you haven't received a balance sheet from the government.  The damn thing is happening with land prices in my country.  Inflation makes the distinction between rich and poor become clearer than ever.  All cannot be justification.

I disagree. Inflation should not have any direct impact on competitiveness. Final price of a product is determined by the market conditions. If the cost of services and raw materials go up, then obviously the price of the final product will also go up. But it will be uniform for all the companies (i.e manufacturers). It is not like the cost will go up for one manufacturer, and it will remain the same for another. Real estate prices (as mentioned by you) on the other hand are vulnerable to inflation, because of limited supply. When people are having surplus money, they will be ready to pay a premium for preferred real estate spaces.

[fillippone]

On apparently uncorrelated news to this thread:


https://twitter.com/100trillionusd/status/1397843883380326400?s=21

FED is juggling M2, Inflation, Stock Market, The Banking system, this is a too unstable equilibrium to be held for too long.

[Xinarae*]

It is not possible for the people to avoid the risk of rising prices of the economy. It is under the control of the government when the prices of the economy go up it puts pressure on everyone high levels of defaulting debt have already put the financial sector at extreme risk and fragile investment conditions have put the economy under pressure. Weak revenue collection if revenue is not collected as per the target there will be pressure on budget implementation. Besides lack of corporate good governance in the banking sector even excess liquidity poses a kind of risk to the economy.

indeed inflation is unavoidable, but the task of the government is to suppress inflation so that it does not skyrocket. I think that with the increase in people's welfare, inflation will not have a major effect on the life of a country. besides that, with good state management, of course it will help the strength of a country's economy

Inflation helps the country's economy the government will have to take tough action. If the government does not control anything properly the challenges in the macro economy may increase in the current financial year inflation will increase as a result of the rising prices of goods in the international market again due to various natural disasters the supply system of the country may be disrupted. Inflation could be hampered if the policies of the major economies change.

[fillippone]

It is not possible for the people to avoid the risk of rising prices of the economy. It is under the control of the government when the prices of the economy go up it puts pressure on everyone high levels of defaulting debt have already put the financial sector at extreme risk and fragile investment conditions have put the economy under pressure. Weak revenue collection if revenue is not collected as per the target there will be pressure on budget implementation. Besides lack of corporate good governance in the banking sector even excess liquidity poses a kind of risk to the economy.

indeed inflation is unavoidable, but the task of the government is to suppress inflation so that it does not skyrocket. I think that with the increase in people's welfare, inflation will not have a major effect on the life of a country. besides that, with good state management, of course it will help the strength of a country's economy

Inflation helps the country's economy the government will have to take tough action. If the government does not control anything properly the challenges in the macro economy may increase in the current financial year inflation will increase as a result of the rising prices of goods in the international market again due to various natural disasters the supply system of the country may be disrupted. Inflation could be hampered if the policies of the major economies change.

I really can’t see how inflation is helping any country economy, besides erasing government debt, at the expenses of those who bought that debt (mainly the National investors, I guess), or via a nominal GDP growth with little real meaning.
Inflation is a savage beast, difficult to tame. Everyone that fiddled too much with variables, gor subdues, sooner or later. I am afraid the FED and other CB’s will soon follow that route.

[OnurGalatasaray]

Inflation is also a big danger for crypto. So many Shitcoins have huge inflation, like Ethereum or Polkadot. Such coins have a big risk of being devalued.
It is similar to cash, if more of it gets printed / staked price will go down per coins and holders will suffer inflation.

We should always only buy crypto where no inflation is a fact (like Bitcoin).

How can you say that Ethereum and Polkadot are vulnerable to inflation, when their maximum supply is fixed?

Çüş where is it fixed? It's not fixed.
Polkadot has 10% inflation per year and has infinite supply and fees are not burned.
Ethereum has 5% inflation per year and has infinite supply but fees will be burned at some point.

Ethereum and Pokadot are extremely vulnarable to inflation but Polkadot even more

You can say that Dogecoin is vulnerable to inflation, because the maximum supply is not fixed.

Yes.
Dogecoin is very inflationary like Ethereum and Polkadot.

That is not the case with Ethereum.

Of course it is same for Ethereum and Polkadot.

[fillippone]

Inflation is also a big danger for crypto. So many Shitcoins have huge inflation, like Ethereum or Polkadot. Such coins have a big risk of being devalued.
It is similar to cash, if more of it gets printed / staked price will go down per coins and holders will suffer inflation.

We should always only buy crypto where no inflation is a fact (like Bitcoin).

How can you say that Ethereum and Polkadot are vulnerable to inflation, when their maximum supply is fixed?

Çüş where is it fixed? It's not fixed.
Polkadot has 10% inflation per year and has infinite supply and fees are not burned.
Ethereum has 5% inflation per year and has infinite supply but fees will be burned at some point.

Ethereum and Pokadot are extremely vulnarable to inflation but Polkadot even more

You can say that Dogecoin is vulnerable to inflation, because the maximum supply is not fixed.

Yes.
Dogecoin is very inflationary like Ethereum and Polkadot.

Even if Dogecoin, ETH of any other shitcoin were designer not to be inflationary, being centralised shits, you couldn’t never trust their “central authorities” to be committed enforcing the protocol. “Can you guys stop trading”, version 2.0

[Reatim]

   Our economy change drastically and very tangible of the eyed of everyone. We can not control the economics cycling in out of the world. More people suffer that can not afford to buy due of high demand of the prices the situation of the poor status it's getting vulnerable so it is really hard when we're in point of the high inflation more risk we can experience.

What inflation when the market had already climbed up when the pandemic happens? I mean crypto market and not the worldwide economy .
if does not? meaning the market was manipulated this all time? But of course we can expect the incoming good things because the prices is steadily holding in the middle and there is no sign of falling back to the value before the bull happens.

[dkbit98]

I was reading one interesting ecoinometrics report showing that long term Bitcoin has proved to beat inflation,
in one year period Bitcoin beats inflation 85% of the time, in two years period 89% of the time, and 100% of the time in four years time period.
We can't know for sure what is going to happen in future and long term but it's safe to say that fiat money at some point with inevitable hyperinflation as we can see in history.

[fillippone]

I was reading one interesting ecoinometrics report showing that long term Bitcoin has proved to beat inflation,
in one year period Bitcoin beats inflation 85% of the time, in two years period 89% of the time, and 100% of the time in four years time period.
We can't know for sure what is going to happen in future and long term but it's safe to say that fiat money at some point with inevitable hyperinflation as we can see in history.

Interesting read.
The flaw in this study however is that bitcoin had such a stellar performance during the last years, that even if you add it to a shitty portfolio, the overall risk/reward is stellar.
So, as you said, the point is to assess the probability of future performance: bitcoin is going to stay a powerful inflation hedge only if will continue to exhibit a meaningful drift.

[affandi]

We know the inflation rate continues to increase every year, because Fiat continues to be printed and the economy worsens due to the Covid-19 pandemic in which people's purchasing power continues to decrease where every shop has decreased visitors.

in 2005 I bought a pack of cigarettes for $2 and now the price of that pack of cigarettes has increased dramatically to $20

the current solution is to invest in crypto or gold assets which in my opinion in the future will help the rate of economic growth for each individual.

[Sithara007]

We know the inflation rate continues to increase every year, because Fiat continues to be printed and the economy worsens due to the Covid-19 pandemic in which people's purchasing power continues to decrease where every shop has decreased visitors.

in 2005 I bought a pack of cigarettes for $2 and now the price of that pack of cigarettes has increased dramatically to $20

the current solution is to invest in crypto or gold assets which in my opinion in the future will help the rate of economic growth for each individual.

The example you have cited is an extreme case, because for different assets inflation is not uniform. One thing I would agree is that inflation will be worse in the near term. Because the governments around the world have returned to the big spending mode, after two decades of fiscal conservatism (the changing political mood necessitates it in many of the countries). This trend started many years ago, but the pandemic has now given the governments an opportunity to justify it.