Imported inflation and hard currency: everything you need to know
Imported inflation is a special case of cost inflation: it occurs when there is an increase in the cost of raw material that a country imports from abroad. As in cost inflation, rising production costs pushes businesses to increase i prices sales in order not to reduce their profits. Following the dictates of the economy this inevitably entails that, as always, it will be consumer final to pay the price.
As consumers we will face all possible price increases and imaginable not only on the products, but also in services thereby further thinning our wallets. Maybe in the short term we will be able to face these increases, without forgetting that there are the “weak groups” who already do not find new glimpses from their meager income, knowing full well that all this has already happened.
I do not want to retrace the sad 70s and 80s where i interest rates had gone above 20% and the unemploymentand it was consistently double digits, but you need to find a remedy and quickly.
The break even point that is the break-even point, generally used for companies, (see Break even point graph: calculation, formula and graph), should also be applied to families.
Read this way, the graph tells us that if we are under the red dot, we can understand that we are at a net loss.
So what to do? Before the euro, the various governments depreciated their currencies, thus favoring exports and stimulating the economy with fairly well-calibrated liquidity injections for companies (Istituto Mobiliare Italiano and other special credit institutions subsidized companies with subsidized contributions or with non-repayable credits) and what can be done today?
In my opinion it would be necessary: 1. massive liquidity intervention by the ECB that it supports the banks by letting them open their wallets; 2. create credit lines for all VAT numbers with long-term or very long-term loans (10, 20 years); 3. use reflation (reflation is the act of stimulating the economy, by increasing the money supply or reducing taxes, trying to drive the economy (especially the price level) back up to the long-term trend, following a fall in the business cycle.
The member states of the euro cannot “mint money”, Therefore, in my opinion there it could be a solution that does not affect public debt, that is to say the tax credit to be passed on to all people (including pensioners) who make the tax return. And if we want to be even more fiscal there is another way to satisfy all Italian families and it is an idea that came to me more than ten years ago and that is: yearly credit card. One comes out of the crisis with one yearly credit card. The question that arises is: where do you find the money? I have already remedied this and I assure you that it does not affect the public debt in the least, on the contrary … If you like there are ways to get out of these unwanted “crises”, it would be enough to apply them.
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