12 July 2023
The Dark Side of Inflation: An Unsettling Outlook
Inflation’s essential role in the current economic system has several concerning implications:
– Reliance on credit and debt expansion fuels a cycle of perpetual debt, benefiting the wealthy while burdening everyday consumers.
– Excessive borrowing and stagnant incomes lead to recessions, as discretionary income is consumed by debt service.
– Limited policy options, such as government borrowing and central bank interventions, only postpone the inevitable collapse.
– Inflation’s impact on debt is temporary, as wages fail to keep up, widening wealth disparities.
– Savers suffer as inflation erodes their savings, pushing them into risky investments to combat its effects.
– Speculation driven by inflation exacerbates economic inequalities, favoring the wealthy and leaving ordinary individuals at a disadvantage.
– Capital is diverted from productive investments, hindering long-term growth and neglecting critical infrastructure.
– Rising global risks and interest rates stifle borrowing, causing economic recessions and impacting everyday individuals.
– The previous “Goldilocks” economy built on deflationary forces and expansive credit is fading, revealing the harsh reality of real-world inflation.
– The system’s distorted policies and false signals are no longer effective, leaving policymakers scrambling for solutions.
In summary, inflation’s negative consequences loom large, exacerbating wealth disparities, fostering economic downturns, and exposing the fragility of the current system.