Many economists are concerned that conditions for a steep rise in inflation have been created. After 1970, inflation in rich countries averaged 10% annually. On the other hand, by 2010 the rate had stayed at less than 2%. Therefore, people ignore the possibility of very high prices. Prices have come down due to reduced demand due to the coronavirus pandemic. The US Federal Reserve wants inflation to exceed 2%. The lesson of 2020 is that the problems that the world had stopped worrying about, can suddenly raise their heads with terrible force. So, one cannot ignore the price hike.
Some experts predict the price to rise when the consumer spending epidemic returns to its pre-condition. On December 3, Bill Dudley, deputy head of the Federal Reserve Interest Rate Committee, warned that a huge increase in prices was necessary to balance between demand and available supply. St. Louis Fed economist David Andolfatto called on Americans to be prepared for a temporary surge in values. Some other experts warn that pressure from the currency continues to persist. Economists at Morgan Stanley Bank forecast inflation in the US to rise by more than 2% in the second half of 2021. Some other groups, like the 1970s, have advised to beware of the steep increase in prices for ten years.
On the other hand, some surveys suggest that people do not expect dramatic price increases. By most estimates, it will take time to reach the level before the employment epidemic. Goldman Sox Bank is unlikely to reduce the unemployment rate to less than 4% by 2024. If unemployment is relatively high, then companies will not increase the salaries of the people and then the prices will not increase.
Rich countries package more than 20 percent of GDP
Excess supply of money in the economy is the root cause of inflation. A fifth of the dalars present in the economy came into existence this year. Governments have given more than 20% of GDP as an economic package after the epidemic crisis in the United States, Britain, Japan and the European Union. Most of this is spent on the purchase of government loans. This money has been used for salaries, welfare works, giving cash assistance to the people. Money lent by central banks of governments is replacing bank debt. Large-scale vaccination campaigns will reduce the impact of the epidemic. People will spend heavily as activities intensify. Demand will be more than supply. This will increase inflation and inflation.
The effect of aging of the population will increase
The joining of the Communist countries of China and Europe has added millions of new workers. The companies have got facilities to produce in other countries including China. Due to this the pressure of workers in rich countries has come down. Now there are no conditions like price rise due to increase in salary. The population in rich countries and China is aging. There will be a shortage of workers in the industries. India and Africa have more youth population, but the politics of rich countries will prevent the arrival of people. In this way the strength of the workers in rich countries will increase. Their salary will increase and the values will increase simultaneously.
Three major reasons
Three main reasons will be accountable for inflation or inflation – 1. Massive economic packages provided by governments to deal with the epidemic. 2. Changes in population pattern. 3. Changes in the attitude of policy makers towards the economy.
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