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From: Sergey Golovin
Good day folks.
As you can see this is only half of the story. As soon as any one can come up with explanation what will happen with that picture in the opposite economic cycle, I’ll post name of the book, author and store where it can be purchased. I'll give you hint - they are talking about share market...
Good luck.
Serge.
Basic checks for inflationary pressure –
Generally, rising inflation means rising employment, rising commodity prices, overheated consumption, and rising asset prices. Rising wages and commodity prices – and in particular rising oil prices – increase company costs. These increases inevitably lead to lower profits or higher prices. Consumers bid up the price of assets (usually using borrowed money) in the belief that rising inflation will raise the price of these assets even further.
Egged on by over-enthusiastic lending institutions, this leads to financial over-commitment, both by consumers and corporations. As consequence, if our exports become too expensive to be competitive, or too many imports are consumed, a balance of payments problem occurs – and individuals and the nation spiral into debt. This scenario, or the prospect of it, inevitably means that the central banks will increase interest rates to dampen down the economy. Unfortunately, this can then turn into the recession.
Good day folks.
As you can see this is only half of the story. As soon as any one can come up with explanation what will happen with that picture in the opposite economic cycle, I’ll post name of the book, author and store where it can be purchased. I'll give you hint - they are talking about share market...
Good luck.
Serge.
Basic checks for inflationary pressure –
Generally, rising inflation means rising employment, rising commodity prices, overheated consumption, and rising asset prices. Rising wages and commodity prices – and in particular rising oil prices – increase company costs. These increases inevitably lead to lower profits or higher prices. Consumers bid up the price of assets (usually using borrowed money) in the belief that rising inflation will raise the price of these assets even further.
Egged on by over-enthusiastic lending institutions, this leads to financial over-commitment, both by consumers and corporations. As consequence, if our exports become too expensive to be competitive, or too many imports are consumed, a balance of payments problem occurs – and individuals and the nation spiral into debt. This scenario, or the prospect of it, inevitably means that the central banks will increase interest rates to dampen down the economy. Unfortunately, this can then turn into the recession.
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