Countless individuals, families, and small business owners all over the world have been impacted by the pandemic. The medical crisis that was created by the pandemic had not been seen in more than 100 years. Even though it is good news that a lot of people are getting vaccinated, it is also true that the pandemic is something with us for the foreseeable future. The economy will take quite some time to recover, and many people are already seeing the impacts of the pandemic on the economy.
Recently, reports were published showing that inflation has been reaching all-time highs. Many are wondering what the future holds for inflation. Why is inflation taking place right now? What does this mean moving forward? There are many people who are thinking about protecting themselves against inflation by purchasing a 5 oz Silver Bar to hedge against inflation.
Why Is Inflation Happening in the Economy?
There are lots of people who are wondering why inflation is happening in the economy right now. The answer is that there is a lot more money in the economy than there was in the past. Even though the Federal Reserve is not literally printing money, a recent coronavirus stimulus package was indeed pumped into the economy. As a result, billions of dollars immediately ended up circulating throughout the economy. With more dollars in circulation, people were able to buy more items. Because there is a shortage of numerous items, the price of goods and services has gone out. What are a few examples of situations where this has happened?
The Price of Goods and Services is Going Up
Because inflation is taking place right now, the price of goods and services is going up quickly. There are several situations where this is happening. For example, the price of gas has gone up quickly. This is because many people are traveling again, meaning that there are planes, boats, trains, and more purchasing gas. In addition, the price of cars is going up as well. Because it is difficult to get computer chips right now, there are not as many new cars being made. This has led to a boom in the used car market. This is causing the supply of used cars to go down, increasing the price. All of this is evidence that inflation is having an impact on the economy.
Many Economic Experts Believe This Will Pass
There are lots of people concerned that this will cause irreparable damage to the economy. Fortunately, this is unlikely to happen. The vast majority of economic experts actually believe this is something that is going to pass relatively quickly. That is because it is unlikely that another significant stimulus package will pump a lot of money into the economy. Even though it is difficult to predict the future, everyone needs to understand that the impacts of this specific round of inflation might take a while to fully materialize. While many areas of the economy have been touched by this pandemic, there are certain areas that may be hit in the near future.
The Federal Reserve Could Raise Interest Rates
So, how is the government going to deal with inflation? The Federal Reserve is responsible for controlling interest rates. Therefore, they are also responsible for controlling inflation. One of the easiest ways for the Federal Reserve to control inflation is to simply raise interest rates. This means it will likely be more troublesome for people to borrow money because the cost of borrowing money will go up. Right now, the Federal Reserve has indicated they are unlikely to raise interest rates before the end of the year. They might not raise interest rates again until 2023. There are not a lot of people who believe interest rates will stay this low forever. If inflation spirals out of control, the Federal Reserve may pump the brakes by raising interest rates overnight. It will be startling to many if this happens.
Looking to the Future: Inflation and its Impacts
These are just a few of the most important points that people need to keep in mind when it comes to inflation. Inflation is something that happens in every economy from time to time. Regardless, economic experts need to do everything they can to protect the country against inflation. Spiraling inflation could cause the dollar to lose virtually all of its value. It is unlikely that this is going to happen, as countless people are keeping a close watch on everything that is happening. Many are watching to see what moves world governments take going forward. Right now, many people are looking at precious metals as a hedge.
