The same blabla again…
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Introduction
Date: 20 January 2022
We consider that over the year 2022, it will stabilize and gradually decline over the year.
Christine Lagarde
Six months later…
She said 3.2% …
Where should I start?
I wanted to write this article a few months ago, but now we have more data…
“Inflation is the worst thing for a economie, end”
Why this is the worst thing that can happen to us, because purchasing power decline, the standard of living decline, and people tends to ask for a raise or demonstrated in the street, and at the end of the road we will face an economic crisis, but the problem is that it’s happening in Europe…
Euro has collapsed to 1.02€ and this zone is absolutely dangerous, it’s the lowest level since 2015, this level was never hit since 2002 oulala I feel old now…
What does all this mean exactly this currency could become like a “sh**t coin” 😂, I mean secondary currency, like the Mexican peso or the Zimbabwean dollar…
Consequences
And why this is a disaster for us (people who use it), is because the value of a currency set the level of inflation, if the euro is strong and we import goods for example (let’s say CHINA)
What I was saying… When the currency is strong, we can import cheaper, easily but when it falls like this… The more € decrease the more the price of goods increases, and the more the inflation will rise… This is really bad.
Guess who is winning in this fu*** situation
It’s not over, if the USD $ keeps rising
let me remind you :
So to conclude (I’m joking this is just beginning) the lower the currency, the higher the inflation, the higher the oil, the higher the wheat, and the more the crisis will be felt in the European countries, let’s not forget the debts of the states which will explode with the rise of interest rates by the Europeans central bank.
Where does it come from?
Simply Inflation comes from printing money…
Central banks put us in this situation.
What’s the solution?
The only way to fight inflation is suspense… ECB must increase the interest rate, but this is where it gets complicated and nasty…
For me for instance I don’t sleep at night… €8,404.7 Billion (do you want me to add the number 0 after?)
Because someone will have to pay that “sheet” 🤭
What really will happen?
We have in the eurozone country like Spain, Italy, and of course France, countries which are very over-indebted, they continue to borrow to support their economy, (and the covid did not really help…)
But before the covid, those countries could borrow money for free because at this time the interest rate was close to zero or even negative.
Now… If the European Central Bank increases the interest rate:
- The first big problem will be the debt of each state.
- The second problem will be that company will be unlikely to invest.
- The third problem will be that household consumption will slow down too.
And finally, when we mixe all those problems together we have what we call a RECESSION
I think we are already in recession but politicians won’t tell you…
Second scenario
What if the European Central Bank doesn’t increase the interest rate, simply Euro currency will fall, and it’s exactly what happened, if the euro loses its value, inflation will increase sharply again.
We are trapped.
As you can see in this link ecb.europa.eu, (guess what they just did?)
They have increased the interest rate…
The Governing Council decided to raise the three key ECB interest rates by 50 basis points. Accordingly, the interest rate on the main refinancing operations and the interest rates on the marginal lending facility and the deposit facility will be increased to 0.50%, 0.75% and 0.00% respectively, with effect from 27 July 2022.
In the USA, the U.S. Federal Reserve has already done it several times this year.
For now, we should be grateful because we don’t face the same difficulties as Venezuela, Lebanon, and Sri Lanka.
We will have to monitor the situation in Italy and Spain because the next month will be very hard, especially this winter.
We are in an economic crisis and political austerity is coming…
What we can do?
This is a tricky situation because we can’t invest our money as I said Economic Growth will slow down and we can not have a saving in the bank because inflation will eat it.
On a positive note to end this… Look at my bills at Five Guys, I remember a few years ago my sister and I could buy 2 burgers + 2 Cajun fries for 3€ each for less than 20€.
Five Guys
I love Geopolitics, I am also interested in Finance, especially CryptoCurrency.
And I'm also a photographer.
And welcome to my imaginary world
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