Monetary Inflation: The Silent Horseman of the Global Economic Apocalypse

In a world where the economy dictates the pulse of nations, a phenomenon stands as an apocalyptic horseman, threatening to destabilize the global balance: monetary inflation. This stealthy horseman rides across borders, leaving behind a trail of uncertainty and economic challenges.

Inflation, that generalized and sustained increase in prices, has become a global problem that does not distinguish between advanced and developing economies. Its resurgence has been faster, more intense and more persistent than expected, affecting not only advanced economies but also emerging markets. In more than 20 years, such a sudden and widespread jump in inflation has not been seen, which now exceeds 5% in many countries.

But what are the drivers of this inflationary peak? They are not uniform in all countries. While some face economic “overheating,” others grapple with the lagging post-COVID-19 recovery, where fiscal and monetary stimulus was limited. Furthermore, inflation reinforces inequality, hitting those who have the least hardest.

The situation is complex and the solutions are not simple. The world's main central banks have the difficult task of solving this problem, seeking a balance between economic growth and price stability. Monetary policy, supply shocks and increases in demand are just some of the causes that have inflated this economic balloon to the brink of bursting.

The International Monetary Fund warns that the slowdown in advanced economies could drag down global growth, with decrease forecasts for the year 2023. However, it is also projected that general inflation could reach its peak and return to pre-pandemic levels in the middle of 2022.

Inflation directly affects the population in several ways:

• Loss of purchasing power: With inflation, the prices of goods and services increase, meaning people's money buys less than before.
• Impact on savings and investments: Savings and investments that are not protected against inflation lose real value, since the return does not compensate for the increase in prices.

• Economic inequality: Inflation can exacerbate inequality as it disproportionately affects those on fixed or low incomes, who are less able to absorb rising costs.

• Uncertainty and changes in consumer behavior: Uncertainty about future prices can lead people to change their consumption patterns, possibly reducing non-essential spending.

To control inflation, governments implement various measures, such as:

• Subsidies and price controls: Some governments, such as Mexico, have chosen to keep the price of products and fuels below inflation through subsidies.
• Monetary policy: Adjustments in interest rates and the money supply are common tools to control inflation.
• Extraordinary taxes: For example, the Spanish government has created extraordinary taxes on large electricity companies and banks to combat inflation.
• Tariff reduction: This measure can help reduce import costs and, therefore, consumer prices.

Regarding the countries with the highest and lowest inflation, according to the most recent data:

• Higher inflation: Countries such as Argentina and Turkey have experienced extremely high inflation rates, with Argentina reaching 276% and Turkey 67.07%.
• Lower inflation: On the other hand, countries such as China and the Seychelles have maintained low inflation rates, with China at 0.7% and the Seychelles experiencing deflation.

This inflation rider is not invincible. With proper policies and international cooperation, it is possible to tame this beast and ensure a stable economic future for all. But time is of the essence, and decisions made today will resonate in our global economy tomorrow.