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Inflation is more significant in this context because in order to combat it, productivity needs to increase significantly. We cannot be a purely consumer based system and hope to avoid significantly rising costs. We need to be more focused on being producers to keep this in check. In other words, being big spenders (stimulus money) and high producers is the best case scenario.. being big spenders and purely consumers is a terrible situation for our economy. COVID-19 significantly impacted production and effectively halted it in some cases. That’s bad news.
What’s kept this in check so far is that people have largely been conservative with their money because of uncertainty. That will change as COVID-19 continues to drop. Once that money starts getting spent in larger volume, that will accelerate the function of inflation. In other words, lots of people with money to spend will compete for the limited availability of goods (low production) and prices will soar for these limited resources.
Inflation is coming. How bad it will affect us all is to determined. Expect some significant boom/bust cycles in the future as this ride gets bumpy as the Fed desperately tries to settle this down over the next 5-10 years.
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