Why Inflation is a big problem for a country?

[Dr.Osh]

Since the first, inflation is the enemy of a country's economy. When inflation occurs, money becomes worthless. however, as far as I know, the way to deal with this, or slow down inflation, is to increase tax rates, increase the quantity of goods in the market, set ceiling prices, save on government spending, and so on. however, this can be minimized. very many countries have been hit by inflation, and it is still running today. they solve their problems with several strategies. however, until now, there are still some countries that are still struggling to escape inflation.

[1714667939]

1714667939

[1714667939]

1714667939

[TheGreatPython]

We all know that Inflation in the US economy is at an alarming rate. Not the only USA, but Inflation is also a big problem for many countries globally, and it seems there is no way to stop it. Is it impossible to stop inflation in fiat currency or govt don't want to take any action it stop it? Do you think people can do anything to stop inflation in their economy or its inevitable?

It is very much possible for the government to control inflation, but I just don’t get why they don’t do it. Although trying to stop inflation it can also have its own consequences, but I still believe that if the government should go about it the right way then they would be able to pull it off properly.

The thing is, do our leaders really care about us that much? Because this is not the first time that we are seeing inflation, it has been happening for a very long time, and as a matter of fact, lots of economists keep predicting that such will happen, but it seems like the government would go ahead to ignore all the warnings that’s not been laid out.

[taufik123]

Since the first, inflation is the enemy of a country's economy. When inflation occurs, money becomes worthless. however, as far as I know, the way to deal with this, or slow down inflation, is to increase tax rates, increase the quantity of goods in the market, set ceiling prices, save on government spending, and so on. however, this can be minimized. very many countries have been hit by inflation, and it is still running today. they solve their problems with several strategies. however, until now, there are still some countries that are still struggling to escape inflation.

and the country with the highest inflation is Venezuela which ends 2021 with inflation of 686.4% and this is the longest hyperinflation. Venezuela's hyperinflation just happened, even though the central government did not take any action to stop the extreme inflation. they just stop the cause without doing a full solution to avoid higher inflation.
Even though Venezuela is currently out of hyperinflation, it is still the country with the highest inflation rate.

[davis196]

We all know that Inflation in the US economy is at an alarming rate. Not the only USA, but Inflation is also a big problem for many countries globally, and it seems there is no way to stop it. Is it impossible to stop inflation in fiat currency or govt don't want to take any action it stop it? Do you think people can do anything to stop inflation in their economy or its inevitable?

The governments don't really want to stop inflation,because:
1.Inflation leads to debt devaluation(including government debts).
2.Inflation boosts the tax revenue.AFAIK,this is called "inflation tax".
Bigger revenue from VAT taxes and income taxes is what every government in the world wants.

The governments/central banks want to put inflation under control,by lowering it to levels below 5% per year.
It has been stated by many economists that low inflation can be actually good for the economy.
High inflation is a big problem,because it increases the poverty among the working class people and it disrupts the business cycle,making it hard to many business owners to plan their investments in the long term.
 

[jaberwock]

Since the first, inflation is the enemy of a country's economy. When inflation occurs, money becomes worthless. however, as far as I know, the way to deal with this, or slow down inflation, is to increase tax rates, increase the quantity of goods in the market, set ceiling prices, save on government spending, and so on. however, this can be minimized. very many countries have been hit by inflation, and it is still running today. they solve their problems with several strategies. however, until now, there are still some countries that are still struggling to escape inflation.

A lot of them are seriously trying as much as possible to escape inflation, and it has been a big problem which has put them in a really bad situation as of today. If you check some of these countries around the world you see that they are suffering seriously from inflation and you would see how the prices of things has gone up and how people has gotten really poor, and the value of their currency it’s nothing good at all, as a result of the economy is down.

 I believe that the government of these countries has many options that they can use in fighting inflation. they can decide to make use of Wage and price control in beating inflation, although that may lead to recession and loss of jobs. But there are still other options, it is up to them to sit down and plan it the right way and make their decision on how to go about fighting this problem of inflation in their country, in a way that it wouldn’t affect them so bad.

[AicecreaME]

We all know that Inflation in the US economy is at an alarming rate. Not the only USA, but Inflation is also a big problem for many countries globally, and it seems there is no way to stop it. Is it impossible to stop inflation in fiat currency or govt don't want to take any action it stop it? Do you think people can do anything to stop inflation in their economy or its inevitable?

Quick increase in inflation rate yearly is alarming because it just means that the prices of the goods and services will also increase. Inflation itself isn't really a bad thing like what some perceive it to be. It just becomes a negative thing when it is fastly increasing and it is not proportional to the country's ability to increase the salary wage the same pace. Higher inflation rate as the time goes by just simply means that the commodities and other materials as well as the services offered will be increasing their price and value due to the demand. If inflation would constantly increase, people most particularly those who resides in the lower bracket of the community will suffer the most. They would be the ones who will be very affected because most of them are just living paycheck to paycheck and barely makes the ends meet.

If the goods sold and services offered will be higher than it originally was, they would have a hard time adjusting and adapting to the changes. If before they are already having a hard time, they would have a harder one this time in thinking where to get the money to sustain their needs to get by on a daily basis. Hence, the government must do something about it or else the citizens will suffer. The cost of living and the price values of goods and services should be balance and proportional.

[stepwilli]

The governments don't really want to stop inflation,because:
1.Inflation leads to debt devaluation(including government debts).
2.Inflation boosts the tax revenue.AFAIK,this is called "inflation tax".
Bigger revenue from VAT taxes and income taxes is what every government in the world wants.

The governments/central banks want to put inflation under control,by lowering it to levels below 5% per year.
It has been stated by many economists that low inflation can be actually good for the economy.
High inflation is a big problem,because it increases the poverty among the working class people and it disrupts the business cycle,making it hard to many business owners to plan their investments in the long term.

Inflation can devalue any debt including personals? Really? Idk but this sounds good to me, this means it is the best time to take a loan during the inflation period because people can pay lesser but loans in times of inflation are unavoidable because its a tough time for everyone. Prices are getting high and people only have a limited money to afford it.

If inflation makes it hard for someone to plan long term then why not plan early or plan before inflation occurs? In that way they can combat the effects of it and they can survive until the inflation rate gets lowered or totally subsided. Inflation is a big problem but only for those live's who have no direction.

[justdimin]

Inflation can devalue any debt including personals? Really? Idk but this sounds good to me, this means it is the best time to take a loan during the inflation period because people can pay lesser but loans in times of inflation are unavoidable because its a tough time for everyone. Prices are getting high and people only have a limited money to afford it.

If inflation makes it hard for someone to plan long term then why not plan early or plan before inflation occurs? In that way they can combat the effects of it and they can survive until the inflation rate gets lowered or totally subsided. Inflation is a big problem but only for those live's who have no direction.

It is true, inflation makes people pay their loans back easier, it makes earning money harder because there is usually a higher unemployment rate but if your job is stable and you are earning accordingly, then you will make more. So, let's assume that you make 10k per month, you live the USA and you just had around 7% or so inflation right?

You tell your boss you want a bigger raise than inflation and get 10% raise for this year, not really possible since bosses would want to pay even less, but assuming you are a vital employee (which you could be with 10k per month) you manage to get it. Now you are making 11k per year.

Assuming you got mortgage payment of 5k per month, you used to have 5k left after you paid it, now you have 6k left to pay it. Next year, same thing happens, now 10% would mean 1.1k more, so you make 12.1k dollars instead, and you still pay 5k, left with 7.1k instead. Year after that same thing and you get 13.31k per month, and still pay 5k. You can calculate it for 10 years.

By the end, you the debt would be nothing to you and you would be making a lot more and you would pay your mortgage very easily. Now imagine living in a nation with 20%+ inflation, your debt would be nothing in a few years.

[oHnK]

Inflation can devalue any debt including personals? Really? Idk but this sounds good to me, this means it is the best time to take a loan during the inflation period because people can pay lesser but loans in times of inflation are unavoidable because its a tough time for everyone. Prices are getting high and people only have a limited money to afford it.

If inflation makes it hard for someone to plan long term then why not plan early or plan before inflation occurs? In that way they can combat the effects of it and they can survive until the inflation rate gets lowered or totally subsided. Inflation is a big problem but only for those live's who have no direction.

It is true, inflation makes people pay their loans back easier, it makes earning money harder because there is usually a higher unemployment rate but if your job is stable and you are earning accordingly, then you will make more. So, let's assume that you make 10k per month, you live the USA and you just had around 7% or so inflation right?

You tell your boss you want a bigger raise than inflation and get 10% raise for this year, not really possible since bosses would want to pay even less, but assuming you are a vital employee (which you could be with 10k per month) you manage to get it. Now you are making 11k per year.

Assuming you got mortgage payment of 5k per month, you used to have 5k left after you paid it, now you have 6k left to pay it. Next year, same thing happens, now 10% would mean 1.1k more, so you make 12.1k dollars instead, and you still pay 5k, left with 7.1k instead. Year after that same thing and you get 13.31k per month, and still pay 5k. You can calculate it for 10 years.

By the end, you the debt would be nothing to you and you would be making a lot more and you would pay your mortgage very easily. Now imagine living in a nation with 20%+ inflation, your debt would be nothing in a few years.

Inflation occurs due to many factors, one of which is because the amount of money in circulation is too much so that its value is not valuable for scarce necessities.  This condition is not good for people to borrow money from banks, because with inflation conditions, the central bank will definitely take a policy of raising interest rates so that people save more of their money again.  This condition will make it difficult for people to get loans with low interest, this is my understanding.