Beautiful Virgin Islands

Saturday, Jul 26, 2025

The inflation beast returns - but don't panic just yet

The inflation beast returns - but don't panic just yet

Now the challenge with inflation is that it increases the cost of living. Inflation when uncontrolled can be very damaging. And if economics is primarily about human behavior, then uncontrolled inflation damages consumer and business confidence which are the platforms upon which economics rests.
And inflation- according to the USA Federal Reserve – is back.

The reason for the return of inflation has been put down to many years of QE Stimulus: the pumping of cash into the global marketplace by Central Banks in an effort to prevent financial collapse in 2008, to today’s pandemic driven stimulus. The present QE is an effort to avoid recession and even depression from a world terrified by COVID 19.

A depression would lead to business shutdowns, bankruptcies, and millions of job losses. Hence policymakers use the instrument of QE- increasing the quantity of cash in the marketplace- through the selling of government bonds and various treasury instruments to investors, in an effort to drive greater consumer spending and prevent business insolvency.

Government bonds are the most secure investment in the global marketplace.

In the Virgin Islands, the idea of government stimulus is an analogy of what the US Federal Reserve attempts to achieve in activating the instrument of Quantitative Easing to prevent a US Depression.

Today, there is an imbalance in the cash in the western marketplace: more cash than the goods and services the cash buys; hence rising prices. This is what is driving inflation.

Can consumers protect themselves against inflation? The preceding is not a simple question with a simple answer.

Any income increase that matches the cost of living increases that inflation generates does the job of protecting the consumer. But for those on incomes that cannot be adjusted for inflation which means the majority of consumers, inflations mean higher prices and higher costs of living.

For residents on fixed budgets- retirees, employees on fixed wages, and so on- inflation means life gets more expensive.

For residents who can push the increase in inflation on others such as their customers, clients, tenants, home buyers, hotel guests, travelers, these people can cushion the effects of inflation.

Investors have ways they can protect their wealth from inflation; such as moving their wealth into more secure investments: established index funds, government bonds, treasury notes, and such.

Historically land prices rise with inflation and landowners may be protected from inflation.

However, interest rate rises frequently accompany the Inflation Beast. Home and business owners with mortgages and commercial loans that are not fixed may get a shocking increase in their interest payments. The preceding is negative fallout from inflation for consumers.

Who wins and who loses in the inflationary environment? If the Federal Reserve increases interest rates, then rates worldwide may go up. That means all of us who borrow on car loans, home and commercial mortgages, bank loans, and credit cards, may see life getting more expensive.

Savers on the other hand may see their cash in the bank receive greater returns as rates rise.

There is a catch 22: Savers may see their rate of returns rise only to spend that extra cash on more expensive goods and services.

Inflation is a complex beast.
Newsletter

Related Articles

Beautiful Virgin Islands
0:00
0:00
Close
Deputy attorney general's second day of meeting with Ghislaine Maxwell has concluded
Controversial March in Switzerland Features Men Dressed in Nazi Uniforms
Politics is a good business: Barack Obama’s Reported Net Worth Growth, 1990–2025
Thai Civilian Death Toll Rises to 12 in Cambodian Cross-Border Attacks
TSUNAMI: Trump Just Crossed the Rubicon—And There’s No Turning Back
Over 120 Criminal Cases Dismissed in Boston Amid Public Defender Shortage
UN's Top Court Declares Environmental Protection a Legal Obligation Under International Law
"Crazy Thing": OpenAI's Sam Altman Warns Of AI Voice Fraud Crisis In Banking
The Podcaster Who Accidentally Revealed He Earns Over $10 Million a Year
Trump Announces $550 Billion Japanese Investment and New Trade Agreements with Indonesia and the Philippines
US Treasury Secretary Calls for Institutional Review of Federal Reserve Amid AI‑Driven Growth Expectations
UK Government Considers Dropping Demand for Apple Encryption Backdoor
Severe Flooding in South Korea Claims Lives Amid Ongoing Rescue Operations
Japanese Man Discovers Family Connection Through DNA Testing After Decades of Separation
Russia Signals Openness to Ukraine Peace Talks Amid Escalating Drone Warfare
Switzerland Implements Ban on Mammography Screening
Japanese Prime Minister Vows to Stay After Coalition Loses Upper House Majority
Pogacar Extends Dominance with Stage Fifteen Triumph at Tour de France
CEO Resigns Amid Controversy Over Relationship with HR Executive
Man Dies After Being Pulled Into MRI Machine Due to Metal Chain in New York Clinic
NVIDIA Achieves $4 Trillion Valuation Amid AI Demand
US Revokes Visas of Brazilian Corrupted Judges Amid Fake Bolsonaro Investigation
U.S. Congress Approves Rescissions Act Cutting Federal Funding for NPR and PBS
North Korea Restricts Foreign Tourist Access to New Seaside Resort
Brazil's Supreme Court Imposes Radical Restrictions on Former President Bolsonaro
Centrist Criticism of von der Leyen Resurfaces as she Survives EU Confidence Vote
Judge Criticizes DOJ Over Secrecy in Dropping Charges Against Gang Leader
Apple Closes $16.5 Billion Tax Dispute With Ireland
Von der Leyen Faces Setback Over €2 Trillion EU Budget Proposal
UK and Germany Collaborate on Global Military Equipment Sales
Trump Plans Over 10% Tariffs on African and Caribbean Nations
Flying Taxi CEO Reclaims Billionaire Status After Stock Surge
Epstein Files Deepen Republican Party Divide
Zuckerberg Faces $8 Billion Privacy Lawsuit From Meta Shareholders
FIFA Pressured to Rethink World Cup Calendar Due to Climate Change
SpaceX Nears $400 Billion Valuation With New Share Sale
Microsoft, US Lab to Use AI for Faster Nuclear Plant Licensing
Trump Walks Back Talk of Firing Fed Chair Jerome Powell
Zelensky Reshuffles Cabinet to Win Support at Home and in Washington
"Can You Hit Moscow?" Trump Asked Zelensky To Make Putin "Feel The Pain"
Irish Tech Worker Detained 100 days by US Authorities for Overstaying Visa
Dimon Warns on Fed Independence as Trump Administration Eyes Powell’s Succession
Church of England Removes 1991 Sexuality Guidelines from Clergy Selection
Superman Franchise Achieves Success with Latest Release
Hungary's Viktor Orban Rejects Agreements on Illegal Migration
Jeff Bezos Considers Purchasing Condé Nast as a Wedding Gift
Ghislaine Maxwell Says She’s Ready to Testify Before Congress on Epstein’s Criminal Empire
Bal des Pompiers: A Celebration of Community and Firefighter Culture in France
FBI Chief Kash Patel Denies Resignation Speculations Amid Epstein List Controversy
Air India Pilot’s Mental Health Records Under Scrutiny
×