Thursday, November 17, 2011

Inflation after ecomonic crisis

From the inflation history graph on website http://en.wikipedia.org/wiki/File:US_Historical_Inflation.svg, we can tell when the crisis hits the economy in early 1930s, the deflation dominated, which caust major social problems including unemployment rates going up, banking difficulty. Because that in order to relieve from depression, government suddenly increase spending on social infrastructures and large projects. These money will inflow into the market. But without recovering from crsis, people will have reservation on daily spending. After the economy returned to normal, the previous money will cause serious inflation, just like in the early 1940s. And I think this is exactly what is going to happen in the next few years.

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