The latest inflation figures are not good news for the economy or home owners. Today i want to look at what is going and and the reaction while also discussing what homeowners who are concerned about mortgages can do.
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Inflation Keeps Getting Worse: A Concerning Trend for the Economy
Inflation, the sustained increase in the general price level of goods and services in an economy, has been a pressing issue in recent times. Unfortunately, this concern seems to be growing as inflation keeps getting worse. The impact of rising prices is felt by individuals, businesses, and the overall economy, making it a matter that demands urgent attention.
One of the primary reasons for the worsening inflation is the continuous increase in the cost of raw materials. In a globalized economy where supply chains are interconnected, any disruption or increased demand in one area can have a domino effect on the prices of goods and services. The COVID-19 pandemic, for instance, resulted in reduced production and disrupted supply chains, creating shortages and driving up prices.
The rising costs of energy, particularly oil, also contribute significantly to inflation. As oil prices surge, businesses face higher transportation costs, input costs for manufacturing processes increase, and ultimately, these costs are passed on to consumers in the form of higher prices. Moreover, the uncertainty in oil-producing regions and the steady depletion of natural resources only exacerbate the issue.
Another factor driving inflation is excessive money supply. Many governments and central banks, in response to the financial crisis or economic downturns, adopt expansionary monetary policies by injecting money into the economy through various means. While these measures aim to stimulate economic growth, if not properly managed, they can lead to an oversupply of money in circulation, which in turn triggers inflation.
Additionally, the labor market dynamics play a significant role in driving up prices. When there is a shortage of skilled workers in specific industries, wages tend to rise to attract and retain talent. Although higher wages may benefit workers, they also increase the costs for businesses, who then pass on these increased costs to consumers through higher product prices. This wage-price spiral can further fuel inflation.
The consequences of worsening inflation are far-reaching. The reduced purchasing power of individuals erodes their living standards, as people struggle to afford basic necessities. Businesses face higher production costs, which can lead to reduced profitability and potential layoffs, further contributing to economic instability. Moreover, inflation erodes the value of savings, making it harder for individuals and businesses to plan for the future.
Governments and central banks need to adopt effective measures to curb inflation and alleviate its adverse effects on the economy. A balanced approach is crucial, considering both short-term and long-term implications. Policymakers should focus on stabilizing the supply chain, addressing energy concerns, and promoting research and development in alternative energy sources to mitigate the impact of rising raw material and energy costs.
To manage excessive money supply, central banks must employ prudent monetary policies, carefully monitoring the money circulation and ensuring it is aligned with the pace of economic growth. Striking a balance between stimulating growth and preventing inflation is key.
Addressing labor market imbalances is also crucial to mitigate inflationary pressures. Governments can invest in education and training programs to enhance the skill pool, ensuring a better match between labor demand and supply. This way, wages are less likely to increase significantly, reducing the potential for a wage-price spiral.
The persistence of rising inflation is a pressing concern for the economy, demanding immediate action. Governments, central banks, and policymakers must work together to mitigate the factors driving inflation and adopt effective strategies to maintain price stability. By preserving the purchasing power of individuals and promoting a stable business environment, we can hope to overcome this challenging period and ensure a more prosperous and sustainable future for all.
Don't skim over a crucially important tip Damien offers: don't wait for your finances to get into an irreversible mess before asking your lenders for help with debt management.
Being able to demonstrate that you've done your best managing your finances will always improve your standing in front of creditors and/or a judge if things get really awful. Burying your head in the sand until the situation becomes unmanageable plays very badly indeed when it comes to seeking a bit of slack in putting matters right.
Poland has far higher inflation it grew past 20% after that stopped even tracking it due to an election coming and stats lying as a historical example being locomotives being cheaper as if that will make bread and electricity more affordable.
Inflation is getting better and reducing, this video makes no sense.
Glad you're back,doing the videos that help people
THE ONLY WAY TO ROB BANKS IS TO OWN THEM
Whilst there are no strict banking regulations the Banksters who sit on the boards of their banks were given money at zero interest which left the vault door wide open for the them to plundered.
I think the models they use have not fully modelled the full effects of Brexit
20% food inflation? If only you had a big market close by..
Seems I was right cbdcs are the new normal kiss goodbye to freedom of commerce
The biggest driver of inflation right now is putting up everyone's mortgage or rent every month. No wonder people all want a pay rise. Why are those in power too dense to see what the average person can?!
Inflation is a deliberate stealth tax caused by counterfeiting currency by banksters in cahoots with governments and has NOTHING to do with rising prices which are just a symptom of the currency counterfeiting taxation fraud on we the people.
Promo-SM
Do not ask ze serious questions .. see the Sargent, pick up a rifle .. and report to ze front lines .. AT ONCE !!!
Great to see you back, Damien! Thanks for all your insightful videos!
Great to see you back looking and sounding yourself mate. All the best from Oz.
My parents bought their house for £6,000 in 1977.
I’ve got a few questions. I would appreciate it if someone could answer one of them if not all of them please.
Does the s&p500 pay your interest/divedends yearly in one lump sum?
Does this work also if you are investing in an etf that tracks the s&p500. The reason I ask is because Trading 212 only has etf and not index funds?
What happens if the s&p500 is negative for a couple of years. Do you just make £0 interest or does it hurt you previous interest gained?
Thanks in advance to anyone that answers these. It’s just that I can’t find anywhere that explains how the s&p500 works if it’s in negative
Hi Damien.
Hope you can help with some suggestions.
We need to renew our mortgage this year, and the rate will change from 1.29% to over 5%.
Should we go for a 2 year period or 5?
What if we choose 2 years, and the rates go over 6% in this period…
Please let me know what you think.
Thank you
Welcome back! Great vid as always
Another great video, hope u feeling better damo!
Good to see you back
I hope the cxxt is caught and sent down. Best wishes.
Pleased see u r getting better.
Brexit means Brexit – and we still haven’t been told what Brexit means. But it means Brexit!
The government and the BoE knew that a big hike in interest rates would cripple house prices, that's why they tried to postpone big hikes but now they see that they have to do it, otherwise they will lose control, hence the 50 basis points increase (I think we will see more in the months to come). All governments hate the possibility of a housing market crash under their watch.
Not an economist, so take this hot take with a pinch of salt.
£700 billion in QE over 2 years. Wages have been stagnant for years too.
Then theres Brexit.
The government pumping the housing market up over the last 30 years is coming back to bite people in the arse.
our country is honestly clapped, they also should be a rule when houses sell that the first time buyers should be the only people considered for purchase not current property owners. nothing worse than having money for a house in this day and age and not been able to get one even if offering above the asking. bs
The governer of the Bank of England… that well known history graduate
Really good mate, straight to the point, not many adverts. keep it up.
Good to see you back fella – you’re advice is needed more than ever
A return to building social housing might help – mortgages for buy to let are causing real pain in the renter marker – it's a madness – the time for pitchforks may not be that far away
Inequality is the killer Damian – some people are making hay while the majority are being driven into penury. I hope you follow Gary's Economics
The BoE is not owned by the government. The opposite is the case. It's owned by a group of super rich people. For their financial support in past wars they bought the right to control the interest rates and money supply. They can print as much as they like but need to get the government to take it as loans. So they create a crisis via their control of the media, forcing the government to take the money which we have to pay back.
This causes inflation, for which higher interest rates is the solution, which massively increases their returns on all the money they printed and loaned.