Unfortunately, it is a self-fulfilling prophecy of sorts.
The higher the inflation, the higher the costs, and the more companies adjust to increase their margins.
There is no easy way out of this mess without one hell of a recession/depression.
Here in North America, there is a desire to raise interest rates higher to combat inflation. That in turn will lead to defaults on loans and mortgages on a spectacular scale.
The problem is that for far too long, interest rates have been super low causing people to take more risks buying houses and obtaining credit.
People here in Canada bought over-priced homes because of low-interest rates. If the rates are raised to combat inflation, the cost of those mortgages will skyrocket while wages remain stagnant.
At some point, nations will need to rip off the bandaid and take drastic measures to bring things back to normal. It may hurt, it may cause defaults but in the end it is the only option left.
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Unfortunately, it is a self-fulfilling prophecy of sorts.
The higher the inflation, the higher the costs, and the more companies adjust to increase their margins.
There is no easy way out of this mess without one hell of a recession/depression.
Here in North America, there is a desire to raise interest rates higher to combat inflation. That in turn will lead to defaults on loans and mortgages on a spectacular scale.
The problem is that for far too long, interest rates have been super low causing people to take more risks buying houses and obtaining credit.
People here in Canada bought over-priced homes because of low-interest rates. If the rates are raised to combat inflation, the cost of those mortgages will skyrocket while wages remain stagnant.
At some point, nations will need to rip off the bandaid and take drastic measures to bring things back to normal. It may hurt, it may cause defaults but in the end it is the only option left.
ENOUGH