Quote from: Biznesmen on November 05, 2023, 08:12:12 PM

Quote from: Promocodeudo on August 02, 2023, 11:18:07 PM

Lack of purchasing power which is caused by inflation is encouraging economic uncertainty, and this is because many nations has been found wanting in production capacity, instead they encourage importation of consumable goods from other countries, the country involved will therefore put up a policy, that will compel the consumer country to exchange there currency to the currency of the country, they are purchasing from, this will further weaken and stagnate there currency to trigger high inflation rate.

The causes of high inflation can be attributed to the following:
1. Excessive Government borrowing
2. Unwanted and unstable domestic policy
3. Unsatisfiable or lack of domestic production

1. Excessive Government borrowing: the government of many nations has seen borrowing as a norm, there accumulated debts requires generation to come, to service, this is common in African countries where the government borrow funds not for establishing an asset or building an institution that can generate generate revenue, for them to either service existing debts and build more infrastructures, they prefer borrowing funds for either embezzling it or using it for things that are not accounted for.
They do this without minding the consequences that may be accompanied with this act, at the end countries like this dips in high level of inflation and valueless currency.

2. Unwanted and unstable government policy: the government policy most times are unfriendly and it is repeatedly done, just for example allowing the importation of already existing good to there country, instead of boosting the production of such goods to meet it's citizens consumption.

3.lack of domestic production: government of many countries practically don't have anything to offer, the keep on wasting the little resources available to their reach, failing to encourage local production, the government should look into locally made goods, this will avail them the opportunity to do business with countries that are interested in the product and services, as the case may be, they should make it their priority to lure local investor, reach a compromise with them, allow them to produce at a minimal taxing rate, this will enhance the domestic needs of the country, No doubt we need each to survive but not in everything.

First of all, moderate inflation is not bad for our economy or ourselves. It stimulates economic growth and promotes capital formation.But high rates of inflation lead to a retarded standard of living as they reduce the real income of people. It's regressive; that is, it adversely affects poor people. It increases inequalities (it increases the profit margins of business entities while reducing the real income of the salaried class—the rich become richer and the poor become poorer), and it reduces capital formation.Moderate levels of inflation are acceptable, but high inflation definitely warrants action by the government immediately.

You summarized the situation very nicely. I agree with what you say, especially about increasing inequality. Increasing inflation also brings about a sharp increase in inequality between classes within the population. These classes are the rich, the middle class and the poor. The increase in the difference between these classes also disrupts the basic way of life of the society.

One of the most important things that the state should intervene in is to prevent the gap between these classes from widening. Societies have a certain way of life, and high inflation negatively affects this way of life