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Why should we expect the rise of inflation dynamics around the world

The long-awaited end of easy money seems to be upon us. Over the past few weeks, the Bank of England has raised prices, and the US Federal Reserve has shown a sharp decline in its commodity program and inflation by up to three times in the coming year. It all comes down to the idea of long-term rising prices it becomes permanent, moving from goods and fixed assets to areas such as pay and employment.

Many of the controversies over growth, rising prices and markets have been related to global changes that we may or may not be experiencing. But what if the stability in the next few years is unstable? What if the seemingly stable inflation begins to decline? I think you can argue that this will be the case for a number of reasons.

First, the effects of the epidemic led to higher prices than in the 1970’s, the last time the US had a longer inflation. Covid has created a financial collapse unrelated to recovery around the world. The US is running “hot”, but China, which has been trying to destroy its assets and debt, has faltered. The fact that these two trees of the global economy is shrinking, not only in terms of trade and investment, but also images of their size, make it difficult to predict how inflationary pressures will flow.

This is one of the many reasons why TS Lombard business analysts call it “biflation”, in which so many resources and resources are pushed and challenged by each other in unexpected ways. For example, when the world changed the emergency demand for “Covid” for all digital goods, as well as epidemics such as medical equipment, protective equipment and household goods, there may still be other things after Covid-19. disruptions in the services, which had no reason to limit investment in the last two years, which left little power.

This has already led to compulsory payment. In the US, where jobs generate more revenue, companies expect higher wages 4 percent in 2022, as the payload reaches 14 years, according to the Conference Board, tank-tank. There are all the disadvantages of this. “The increase in wages among young workers in particular has reduced the amount of money paid to experienced workers – who are also looking for new opportunities in the hot market.”

At the same time, companies may be prone to price-cutting trades that can reduce profits. Although there has been a great demand for goods in the last few years, we can soon see an increase in the prices of manufacturers and retailers, as retailers avoid over-purchasing. Deutsche Bank’s December research report states that “retailers are calling for a busy holiday season” when “manufacturers are developing and producing more products than they did before Covid”. According to the Bank for International Settlements, “mechanical power per CPI It can become disinflationary ”when slow disruption and“ security behavior ”diminish.

This can lead to a drop in prices, as can rising prices for services. Significant changes in spending over the past year have taken place in places such as outdoor entertainment, restaurants, radio and theater. But this, too, could change dramatically depending on how the Covid-19 changes, as we have been eliminated. vacation plans you see.

All of this creates what the BIS has recently called the “bullwhip effect”, in which intensive planning efforts to increase inflation create their own complex, slow-moving currents that severely disrupt prices. The geopolitical shift from efficiency to purchasing power, which could benefit everything from their production to new digital finance-driven private equity, will confuse economists who are trying to adapt to rising prices and data from previous years.

Technology is the ultimate wild card. Creative intelligence means that it can do as much as people can; 5G is an internet of things promoting a successful business. Both are deflationary. But that is only part of the story. For example, long-term work lowers prices but raises real estate. Installing robots (up to 12 percent this year in the US) will be good for companies trying to keep prices down, but bad for the unemployed facing rising fuel and food prices.

As a result? I think we can see back and forth messages from central banks hard to know where things are going. Add a credit history and valuables from decades of inflation and unprecedented downturns, and you have one of the most difficult places to make money. If someone is going to have to raise wages, it is people who are trying to figure out where inflation is going.

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