Money inflation and it's causes
Money inflation in 2022 and it's causes
The Indian stock market lost almost six lakhs crore rupees is that means India is under recession,is that means indian economy will under inflation.
Now the situation is, the inflation rate for food products from 8 to 10%, which is farely a high amount.This will affects all the people
in India especially the poors.If this inflation is not handled correctly it will cause massive repurcussions on politics,economy, finance and stock market and so on.
So what the inflation is kept a 1lakh rupees for 10years without using after 10years it will be approx 60 thousand, we are not using the money but then after 10years the value of money is reduced,this is called inflation.
In an average, monthly we have the expenses commonly like food, transport, rent, medical, educational and so on.
If for example,
you spent 10,000 for all the expenses this month
you spent for all the same expenses next month for amount 10,500
This is meant as 5% inflation on your monthly budget.
There are some different types of inflation
1)Cost Push inflation
For example, the petrol cost is getting higher month by month,but if you are not using any 4 wheelers, 2 wheelers also we indirectly pay the amount.How it is happening is , if we buy any things they are not getting it from directly, they produced somewhere and transported
them and give it necessary places. If the petrol prices increases, then automatically the transportation charges also increasing as well
2)Demand inflation
For example, real estate if the seller has one land but the demands are high for that land , then the seller increase the price for the land,
then sell the land with the buyer who give high amount.
If the supply is low, demand is high then definitely there will be an infation.
3)Hyper inflation
For example, goverment is printing money if they print a lot and give that to people, what happens is demands are higher which means everyone is having money , so what the supplier will do is increase the money for all goods beacause the production of goods are low, this causes very much inflation.
Goverments across the world are telling us that because of the Russia Ukraine crisis supply chain disruption happened as a result not enough goods are produced , so the prices are increasing.If we take, the oil prices in early 2022 noticed that the oil prices suddenly
escalated,goverment is telling this happened because of the Russia Ukraine crisis because Russia is the major oil supplier.So there was the supply shock demand.These are comes under the supply side problems.
If we earning the money not spending then this would be a demand side problem because the supply is increasing then there is no buyers
also this will come under inflation. Both supply and demand will be in a sensible level that is what by meant as the healthy growth rate of economy.Not able to compare the 2022 inflation with any other inflation because everything is different.
Take an example of the Zimbabwe currency due to the problem of inflation here.
The inflation happening becuase of both demand and supply but mainly because of the demand, the goverment has the ability to print any amount of money and circulating between all the other economics and all the goverments across the world are chasing the notes and trying to get them back.
This is having excess liquidity in the market.This is probably the first time in the last five years that this much inflation hitting accross the developed economies.
So come to conclusion that why the inflation problem is there and likely to persist for a little bit but there is nothing like doomsday scenarioas of now. So have little bit of faith,study and invest.
The Indian stock market lost almost six lakhs crore rupees is that means India is under recession,is that means indian economy will under inflation.
Now the situation is, the inflation rate for food products from 8 to 10%, which is farely a high amount.This will affects all the people
in India especially the poors.If this inflation is not handled correctly it will cause massive repurcussions on politics,economy, finance and stock market and so on.
So what the inflation is kept a 1lakh rupees for 10years without using after 10years it will be approx 60 thousand, we are not using the money but then after 10years the value of money is reduced,this is called inflation.
In an average, monthly we have the expenses commonly like food, transport, rent, medical, educational and so on.
If for example,
you spent 10,000 for all the expenses this month
you spent for all the same expenses next month for amount 10,500
This is meant as 5% inflation on your monthly budget.
There are some different types of inflation
1)Cost Push inflation
For example, the petrol cost is getting higher month by month,but if you are not using any 4 wheelers, 2 wheelers also we indirectly pay the amount.How it is happening is , if we buy any things they are not getting it from directly, they produced somewhere and transported
them and give it necessary places. If the petrol prices increases, then automatically the transportation charges also increasing as well
2)Demand inflation
For example, real estate if the seller has one land but the demands are high for that land , then the seller increase the price for the land,
then sell the land with the buyer who give high amount.
If the supply is low, demand is high then definitely there will be an infation.
3)Hyper inflation
For example, goverment is printing money if they print a lot and give that to people, what happens is demands are higher which means everyone is having money , so what the supplier will do is increase the money for all goods beacause the production of goods are low, this causes very much inflation.
Goverments across the world are telling us that because of the Russia Ukraine crisis supply chain disruption happened as a result not enough goods are produced , so the prices are increasing.If we take, the oil prices in early 2022 noticed that the oil prices suddenly
escalated,goverment is telling this happened because of the Russia Ukraine crisis because Russia is the major oil supplier.So there was the supply shock demand.These are comes under the supply side problems.
If we earning the money not spending then this would be a demand side problem because the supply is increasing then there is no buyers
also this will come under inflation. Both supply and demand will be in a sensible level that is what by meant as the healthy growth rate of economy.Not able to compare the 2022 inflation with any other inflation because everything is different.
Take an example of the Zimbabwe currency due to the problem of inflation here.
The inflation happening becuase of both demand and supply but mainly because of the demand, the goverment has the ability to print any amount of money and circulating between all the other economics and all the goverments across the world are chasing the notes and trying to get them back.
This is having excess liquidity in the market.This is probably the first time in the last five years that this much inflation hitting accross the developed economies.
So come to conclusion that why the inflation problem is there and likely to persist for a little bit but there is nothing like doomsday scenarioas of now. So have little bit of faith,study and invest.
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