What is the most important thing happening these days? Is this Nir Orbach’s resignation from the coalition? Maybe this is Bibi-Olmert’s statement? Maybe these are the internal conflicts within the Labor Party? So this is, not so much. The most important event that is happening these days in the world is inflation – a rapid and prolonged rise in prices. This is happening both in our country and in the US and in the UK and the EU and in all the countries of the world.
Inflation is the most powerful modern destructive force we know. When prices go up so much over a very long period of time it shakes everything – it shakes families, it shakes marital relationships, it shakes economies and it shakes politics too. I’m about 42 all my adult life has basically been conducted without inflation. Price increases have been small and measured and now, all of a sudden we are back to the price increase that was last seen 40 years ago.
Raising the interest rate – and our pocket Another Day
What to do? Central banks around the world are raising interest rates overnight. This is likely to happen in the US and later here too, and when you raise the interest rate the price of money goes up and then those who are thinking of buying an apartment think twice that suddenly the monthly mortgage repayment is much more expensive. Business owners who want to set up a new factory More expensive and the economy is cooling down.People buy less and then eventually prices are supposed to go down.
Man of Stability Pocket animals
Only it’s not really an exact science, so if the central banks raise interest rates too much the economy will cool down so much that it freezes – and we may find ourselves in a recession, meaning people will lose their jobs and unemployment will rise and it may last for a long time.
I do not know if we will really get there, but we might. So why do it anyway? Because untreated inflation is much worse than anything else. Ask anyone who lived here in the 70s and 80s and they will tell you that when your money loses its value every day – there is nothing worse than that. In short, with all due respect to the conflicts in the coalition, inflation and interest rates is the most important story happening these days, and more is expected to accompany us later.