Post
Topic
Board Economics
Merits 2 from 1 user
Re: Time to foot the bill
by
Fortify
on 27/10/2021, 20:29:13 UTC
⭐ Merited by paxmao (2)
As I mentioned a while ago, and as it is obvious for everyone, the money printing and giveaways for furloughs and checks signed by "the president" party is not ended or about to end. And it is time for the hangover. Inflation rises, as it could not be otherwise. The private sector, particularly some sectors, are experiencing a demand of qualified workers and that means that salaries are likely to keep with inflation. However, the governments are playing with the idea of not keeping public salaries with inflation.

Depending on the country and the flexibility, this means that civil servants and public sector may become underpaid and those who actually have skills may leave to the private sector. As a result, I forecast that public services are going to deteriorate.

As you point out, the printing presses have been on full power for over a decade now and now we have a perfect storm of ingredients from Covid causing a huge upset to the global economy. We went from output dropping to near zero last year, yet in many countries people were getting subsidized and saving huge amounts with less avenues to spend. To this year people have those mass amounts saved up and want to go on spending sprees like they would have in the years before Covid. So factories of all kinds were shut down when demand was low, there was a bit of spare capacity which has now vanished and the factories cannot meet the heavy demand taking place right now. It will be an interesting few years while everything works itself back out again but for many countries it makes sense for inflation to spike a bit before hopefully getting back to "normal".