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6 Risks of a Long Period of Inflation!

6 Risks of a Long Period of Inflation!
"""Throughout history, we have witnessed a wide range of economic conditions and circumstances, including recession, inflation, and everything in between! For a few years, we had very low inflation, which was largely caused by a variety of global conditions, and was largely disrupted by the ramifications and impacts of this horrific pandemic! Currently, we appear to be experiencing significant inflation, which has been caused by a variety of factors, including, but not limited to: post - pandemic ramifications; supply and demand issues caused, in large part, by supply - chain issues; maintaining an unrealistically - low, prolonged period of near - record - low interest rates, and so on. With that in mind, this article will attempt to examine, consider, review, and discuss six potential dangers posed by prolonged periods of inflation, as well as why it is critical to be aware of, and understand, options and alternatives in order to choose the best - path - forward!

1. Cost of Living: Some factors influencing the cost of living include: wages (and wage growth); prices; and how wages are or are not able to keep up with cost increases, etc! Most people are aware that in the last few months, there has been a significant increase in pricing, most notably in food stores, restaurants, and nearly everything else related to day - to - day existence, etc!

2. Federal Reserve: In recent times, the near - historic - low, extended period of interest rates has, in addition to the intended measures (helping businesses and the economy in difficult times), caused a Real Estate, Sellers Market, and a massive increase in home prices in most parts of this country! Furthermore, it resulted in an increase in consumer credit use because borrowing became more affordable! However, most economists predict that many of these supports, as well as the ability to maintain such low rates, will be gradually reduced (or minimized), most likely beginning next year. What effect will this have, and will we see the historical reaction, which has been that raising interest rates helps reduce inflation, and so on?

3. National economy/conditions: Due to a global supply chain set of obstacles/challenges, many industries have faced challenges in terms of obtaining sufficient amounts of needed materials, etc! Almost any store will have more - sparse - shelves than we have seen in recent memory! Furthermore, building supplies, products, food, toys, cars and car parts, and so on are under - stress as a result of this!

4. Global economies/economic conditions: Almost every nation is dealing with economic issues and challenges! The United Kingdom has been greatly impacted by global as well as specific national trends/causes/conditions! Because we largely live in a global economy, any disruption in the supply chain affects everyone!

5. Stock and Bond Markets: For a variety of reasons/factors, the United States Stock Market has benefited significantly and seen significant increases in stock prices. Aside from the obvious reasons, because interest rates have been so low, many investors believed stocks were the only game in town! Bond rates will rise if interest rates rise, and existing bond prices will adjust and fall!

6. Immediate, intermediate, and long-term consequences/impacts: The immediate impact of inflation is usually rising prices and wages that rise at a much slower rate! We begin to see weakening economic trends in the intermediate - period, and in the longer - term, depending on how long it continues, there are frequently several, unfavorable ramifications and impacts!

Don't take inflation and its associated risks for granted! The more you learn and comprehend, the better prepared you'll be!"""
 

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"6 Risks of a Long Period of Inflation!" was written by Mark under the Finance category. It has been read 102 times and generated 0 comments. The article was created on and updated on 13 January 2023.
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