Friday, September 19, 2008

Can inflation be the end of this world?


Hello There! =D So my topic today, is kinda not cheerful or dreamy, but a bit dry and my assumption.
Ok , to begin with..

What is Inflation?

Inflation is the steady rise in prices of goods and services which we consume/get.

Why can inflation be the cause for the end of the world?

Now that there is inflation in all countries, we know that inflation has some effect on every economy. That effect can be bad as well as sometimes good, but mostly bad.

How is it bad?

In our economy we have people/population divided into groups:
High Income Earners, Middle Income Earners [ consisting of High Middle Class and Lower Middle Class Earners] and Low Income Earners [Including the unemployed].
When there is an increase in the prices of goods and services, the first effect will be on its consumers, who are segmented into different groups based on their incomes as mentioned above.
But amongst consumers, the first group that will be affected the most are the Low income earners and the unemployed population of an economy.If the prices rise too high then the amount of goods and services the LIEAU[Low income earners and Unemployed] buy would fall. And if the prices go on increasing on a faster pace than usual, then the employment rate will go high as the firms will make employees redundant, therefore adding to the LIEAU group, and if on the same rate the prices go on increasing then the LIEAU group shall go into starvation and then once, this effect has taken place, the Lower Middle Income group Earners [LMIGE] shall be the victim, as now they will be considered as the LIEAU group as now there wont be any or hardly any low income earners as they all are unemployed, by that the standard of living in the economy falls, and the high income earners save more in order to save themselves from the recessing economy, also, as unpredictable as things can get, some unemployed people can take the route of theft just to fill in their stomach and live. They can loot the High income earners and some of the High Middle Class population.
Also most or some of the unemployed cannot afford to survive on government help either, because the government itself will be getting lower amounts of money as so many people from all the groups of economy are going towards being unemployed due to rising prices [ if the prices increase, workers and employees shall demand more wages/salary therefore increasing the costs for the firm] and so the Government gets less taxes and then can support less unemployed people, even the Pensioners can ask for more, the country will need improvement and so the Government will hardly be left with any money, therefore decreasing the national wealth even more. So there will be a lot of crime in the countries, that increase to terrorism and then wars and even more destruction.
Now imagine, this was all in just an economy, a country, if this happened to all or most of the countries in the world what shall happen? Due to starvation, millions die, Due to wars and terrorism, some more million die, due to lack of resources and safe shelter for living some more die. Even before countries reach this worse of a stage, So many countries already are facing a downward movement in their economy, even the biggest to the most powerful countries like United States of America!! Then what do you think this world is heading to????? People device new methods and theories on the end of this world, unlike anyone else, as weird and untrue it seems, it's just another view, another theory. another thought.. By Me...

P.S.: This view of mine can be entirely wrong, and just another useless piece of imagination by me, and also it is not the complete view of what is going to happen to this world, or what is happening, this is solely the popcorn that's popping in my head, nothing else =)

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