Inflation and Interest Rates 3

 

Inflation and Interest Rates

In the event of high inflation, central banks typically resort to raising interest rates on deposits. This, in turn, increases lending rates. Higher borrowing rates reduce the availability of new investments and increase their costs. Consequently, the rate of new investments is closely linked to the unemployment rate in any society. The inception or birth of new investments increases the labor force. The rising costs of existing industrial or commercial establishments significantly impact the size of the workforce in any establishment. This may prompt senior management to dismiss employees and consolidate several jobs or tasks previously performed by three employees into one. This is what Elon Musk did when he began his work with the Trump administration, dismissing government employees and US aid agencies without considering the social aspect and the rising unemployment rate.

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...And the decision that is more difficult than getting rid of workers is the exit of the establishment from the market and heading towards liquidation after evaluating its assets and liabilities... and thus the loss of tax revenues that this establishment was paying to the government... the high unemployment rate is closely linked to the high crime rate, especially in developing countries... because the hope in developing countries of compensating for lost jobs is slim... and the loss of tax revenues paid by workers and employees within the same establishment... and the loss of spending by employees and workers on other sectors within society... such as the domestic trade sector (supermarkets and hypermarkets), for example... because the employee or worker is no longer paid... and as I wrote in the previous articles about the idea of ​​reducing the effects of Rising inflation through the use of insurance money... Some governments around the world resort to disposing of bonds, stocks, real estate, or companies they own, by selling them to generate liquidity... which governments use to reduce tax rates on struggling businesses.

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And providing installment systems, whether in the real estate sector, the tourism sector, or any sector that governments in developing countries see as likely to be harmed by rising inflation... What's important, and most importantly, is preserving these existing businesses that have experience in the market... preventing them from laying off workers and preserving existing businesses. Through banks, these businesses can be given soft loans from the proceeds of the government's sale of their assets... and extending these businesses. With new consumers like my idea in the previous two articles.. is much more important than reducing the tax rate or loans... and that the sales proceeds in addition to the insurance money.. will be a large amount entering the market to restore recovery to it.. and to keep the high inflation rate and its effects present.. but reducing the percentage of its effects on societies.. is the job of governments in developing countries.. until the end of the period of military confrontations in the world.. which will increase the percentage of military spending in the general budgets of the European Union for example.. to push it to increase taxes on its citizens... and that the political movement to end these crises.. is a demand of the East before the West and the far before the near..