March 24, 2023

Inflation- (What-Inflation?) – Living here has always been expensive, uncertain, and difficult.

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By R.D. Miller

Economic experts say that the global economy is experiencing a 40-year-high inflation, with more than a 9% increase. It may cool off to around 8% in the coming months.

Many central banks have raised interest rates by about 1.25 percent per month since May 2021, which continues to threaten their economies.

Many industrialized countries have historically implemented policies to mitigate the impact, and while these policies can have a direct effect on lowering inflation, the risks generated can create additional uncertainties to the overall economy, according to experts.

It has always been a”Demand-Pull Inflation” in many poor and developing countries, which occurs when the economy’s demand for goods and services exceeds the economy’s ability to produce them. 

The government can raise taxes, decrease expenditures, and reduce the money supply and not all analysts agree on how to deal with the inflation

The options are limited for many of these poor and developing countries, even though some measures have been put in place.   However, I will not bore you with a laundry list of inflationary causes.

Simply put, rising prices reduce people’s purchasing power, causing them to spend more and borrow less for investments such as home purchases. 

What is certain for people living in many poor and developing countries is that high prices on basic goods and services, low wages, high employment, under-employment, and little pressure to hire new labor have been long-standing issues.

The perpetually hidden math that is seldomly  talked about: 

The high cost of living has for decades already created massive inequality and an economic divide between the haves vs the have-nots

Unfortunately, only a few will benefit, such as potential lenders on personal loans, mortgages, and credit cards. This increases lenders’ earning potential. However, on local savings accounts or Certificates of Deposit (CDs), these rates can be significantly lower than the national average.

Those at the bottom of the income scale, and middle class; however, are more likely to see their savings dwindle.

The hidden numbers are local grocery stores, hardware, gas station, restaurant to street vendors selling goods and services, their prices can differ significantly within a block of each other.

Furthermore, while prices for fuel, food, and utility services have stabilized or decreased slightly, as inflationary rates have steadied or decreased in other industrialized countries, this is not the case on these shores.

Filling a standard compact vehicle with fuel in the United States, for example, averaged $40.00 at the peak of inflation, and fueling a similar vehicle can cost around $US70.00 on these shores.

Price gouging with little to no regulation and just the wealthy profiting, even more, is another factor.

Please let me know when it is adjusted to help the downtrodden, and the middle class.  

Today, it seems that ex-pats and visitors are paying the price for people who stayed put, like at the peak of the COVID-19 Pandemic.

Inflation only exposes systematic socio-economic conditions.

Unfortunately, massive imports have forced several local farmers’ products from the stores, and they have to cut back on production.

These local farmers, moms, and corner stores can no longer fight back against beautifully packaged corn, tomatoes, pork, poultry potatoes, fish, apples, grapes, and bananas from China and elsewhere. 

The significant departure from native foods and cultural customs has resulted in much higher prices linked to the global food supply chain. 

Does a level of accountability exist, and regrettably, it seems inflation has turned into a convenient excuse for poor policies?

The real rate of inflation, as experts noted, is 8-9 percent, but how many people have already been left behind, combined with limited opportunities for upward mobility?

Even though experts have noted that upward price pressure is cooling. Sadly, these communities consistently have seen prices go up again even in better economic times.  

Any cooling-off is a day at the beach if any free ones remain. 

The unmeasurable high cost of living coupled with socioeconomic disparities for decades is nothing new. 

Again, you are free to make your interpretation, and when you say things are back to normal, who, what, when, how, and where are you referring to?

Unfortunately, I believe that the systematic inflationary issues have been exposed by multi-national companies that own local ports, supply-chain, and export channels to your local tolls, to the relentless scrutiny many visitors and ex-pats face bringing items for family and personal use whether via the airport or other pre-arranged shipment.

Unreasonable and unexpected customs fees are another source of hidden and persistent inflation that macroeconomic data cannot capture.

Accountability and financial transparency are beyond the Consumer Price Index (CPI)

The relationship between monetary autonomy on these shores is as complicated as the political system. 

Even though inflationary periods cannot be blamed solely on elected leaders, it has unfortunately become a talking point for failed policies to continue winning local elections, regardless of which party is in power. 

(CPI) in these areas is not comparable to an analysis based on reliable data, such as a drop in fuel or grocery prices. It simply refers to how much these neighborhood stores can raise their prices and still get away with it.

Often when the developed world catches an economic cold, the rest of these shores will certainly catch the flu and lack medication.

Sure, geopolitical issues, like war, supply-chain issues, and political unrest play a role, but these communities must continue to bear the relentless rough tides with little or no reinforcement to withstand the price increase  hurricanes. 

Many Caribbean countries, for example, print their currencies, but the values are pegged to the US dollar. 

Nonetheless, a peg can reduce uncertainty, encourage trade, and boost economies. Some experts noted it may lead to greater macroeconomic policy restraint.

If investors and politicians are bullish, who remains bearish?

This opinion is not to persuade people to vote in an election based on inflation; instead, ask yourself, are you better off now than you were? 

Consider your safety, rising prices, upward mobility, and education system, healthcare to name a few. 

Inflation is just a small part of these regions’ systematic problems. I believe democracy stops inside the ballot box. After the votes, poverty, inequality, unemployment, and poor governance have remained persistent.

The inflation rate may change, but as previously reported, if corruption, poor leadership, and authoritarian maneuvering only to maintain power, and where only those connected to political leaders are getting ahead, inflation is just another barrier.

Many argued that critical community needs are being overlooked and that decisions made by a few only appear to benefit them, but you are the change one seeks for better numbers, just like the inflation

This type of oligarchy system of government makes these politicians, and close allies among the richest people in these areas, according to reports. They have an enormous influence even in the delivery of justice.

Many retired political leaders left office with enormous wealth, but the problems they were elected to address, such as the high cost of living, crime, and poverty remain. 

However, let me get back to my opinion on inflation.” 

“As inflation stabilizes, the stock market is poised for a significant rally,” Wharton professor Jeremy Siegel says.

“There are signs in some countries of lower unemployment rates, but only for those who have good economic policies. 

Unfortunately,  these communities’ accounts have been depreciated, thus leaving them further behind. 

The outlook depends on where you sit

Many locals and ex-pats who enjoyed a decent standard of living and enjoyed getting out and spending money in their communities now face the reality that public safety concerns outnumber inflation. 

They must now become more protective of their possessions. Many studies have found that the crime rate is always higher than the inflation rate.

When Ms. Jane who retired cut back because the cost of materials and labor has increased from what she had budgeted, the new construction is placed on hold. 

The nearby workers or handy persons who needed to be recruited to finish her project now must wait. 

Even withdrawing her funds from some of these local banks is another wheeling task caught up in inflationary economic decline. 

Combined with her safety of becoming a target for crime; she too decided to leave town, and many local shops suffer.  

Experts noted communities where unemployment and crime are already rising, coupled with the ever-widening gap between the haves and the have-nots, inflation only creates more problems

Everything is at a premium on these shores and has gotten farther out of reach. 

So, the local question remains the same, “what inflation?” 

The only response is that, as they often maintain, things have been this way for a very long time.

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