This letter responds to the Honorable Jason Smith’s three questions about the implications of excessive inflation. Inflation and Income According to the CBO, the rise of real labor compensation (i.e., compensation adjusted for inflation) will eventually catch up to the growth of labor productivity. According to the CBO’s most recent predictions, from 2022 through 2031, […]
Does Raising Taxes Cause Inflation? Read More »
Deflationary times in the nineteenth century were caused by a rise in production rather than a fall in demand. Deflation occurred during the Great Depression as a result of a failing financial sector and bank bankruptcies. The deflation that occurred at the start of the Great Depression was the most severe the United States had
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“While cash isn’t a growth asset, it will typically stay up with inflation in nominal terms if inflation is accompanied by rising short-term interest rates,” she continues. CFP and founder of Dare to Dream Financial Planning Anna N’Jie-Konte agrees. With the epidemic demonstrating how volatile the economy can be, N’Jie-Konte advises maintaining some money in
Is Cash King During Inflation? Read More »
GDP is a good indicator of an economy’s size, and the GDP growth rate is perhaps the best indicator of economic growth, while GDP per capita has a strong link to the trend in living standards over time. What is the most important indicator of economic growth? Economic growth is defined as an increase or
Is GDP A Measure Of Economic Growth? Read More »
A recession is a natural element of the business cycle that occurs when the economy declines for two consecutive quarters. A depression, on the other hand, is a prolonged decline in economic activity that lasts years rather than months. This makes recessions far more common: in the United States, there have been 33 recessions and
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Inflation occurs when prices rise while money’s purchasing power decreases. It hurts consumers, but it doesn’t always hurt stocks. More properly, some industries are more resistant to inflation than others, but the utilities sector is rarely a safe haven from rising prices. What happens to utilities when prices rise? The main reason why people buy
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The United States’ annual inflation rate has risen from 3.2 percent in 2011 to 4.7 percent in 2021. Is the current rate of inflation high or low? Inflation in the United States has accelerated to 7.5 percent, the highest level since 1982. Shelter (4.4 percent vs. 4.1 percent); food (7 percent vs. 6.3 percent), particularly
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Compensation is an important factor to consider when developing a strategic personnel plan. Compensation planning is more important than ever during a downturn, as we’ve previously stated. Employees labor for the firm in exchange for compensation, while the company is made up of employees. This is true regardless of the economic situation at the time,
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An inflation trade is a trading strategy or investment strategy that aims to profit from rising price levels affected by inflation or inflation forecasts. What impact does inflation have on traders? Consumers, stocks, and the economy may all suffer as a result of rising inflation. When inflation is high, value stocks perform better, and when
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The 2008 Great Recession may have developed into the second Great Depression if TARP, ARRA, and the Economic Stimulus Plan had not been adopted. What role did the government play in the 2008 financial crisis? The Great Recession lasted from December 2007 to June 2009, making it the longest downturn since World War II. The
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