How World Cope Up With Inflations Over Time - Dailyforextrading

How World Cope Up With Inflations Over Time - Dailyforextrading

Think 9% Inflation Is Bad? Try 90%

Eduardo Rabuffetti is an Argentine who has been to the United States once, his on 1999 honeymoon in Miami. Yet he probably knows the $100 bill better than most Americans.

He says he can pick out a counterfeit by touch. He can tell you exactly what $100,000 looks like. (Ten half-inch stacks, small enough to hold in one hand.) And on numerous occasions, he has walked down the streets of Buenos Aires with tens of thousands of U.S. dollars tucked into his jacket.

That is because Mr. Rabuffetti, a property developer who has built two office towers and a house here, bought the land for each of those buildings in $100 bills.

“Here, if you don’t actually see the money, nobody signs anything,” he said. “After the number of crises we’ve been through, let’s just say you get used to it.”

It is not just Mr. Rabuffetti. Nearly every big purchase in Argentina — land, houses, cars, expensive art — is done in tall stacks of U.S. currency. To save up, Argentines stuff bundles of American bills into old clothes, beneath floor boards and in bombproof safe deposit boxes past nine locked gates and five stories beneath the ground.

Argentines hold so much U.S. currency — experts believe perhaps more than anywhere outside the United States — sometimes it gets thrown away by mistake. Last month, passers-by found tens of thousands of dollars blowing around at an Argentine dump.

The dollar is king in Argentina because the Argentine peso is disintegrating in value, particularly over the past month. One year ago, about 180 pesos could buy $1 on the widely used black market. Now it takes 298 pesos to buy a buck.

With the peso plummeting, prices are soaring to keep up. Many economists expect inflation here, already at 64 percent this year, to hit 90 percent by December.

Is soaring inflation worse than the recession the Fed may trigger by aggressively fighting it?

Is the cure worse than the disease? The Federal Reserve is hiking interest rates at its most aggressive pace in decades to bring down inflation that hit a 40-year high of 9.1% in June. The campaign has sharply increased the odds of a recession. A Wells Fargo economist and others forecast a downturn by early next year.

Bernie Sanders says the Inflation Reduction Act will have 'minimal impact on inflation

Vermont Independent Sen. Bernie Sanders adopted a tone more similar to that of Congressional Republicans than Democrats on Saturday when he said that the hotly debated Inflation Reduction Act will do little to reduce inflation.

"Madam President, I want to take a moment to say a few words about the so-called inflation reduction that we are debating this evening," Sanders said on the Senate floor on Saturday night. "And I say so-called, by the way, because according to the CBO, and other economic organizations that study this bill, it will, in fact, have a minimal impact on inflation."

Sanders went on to criticize the bill by saying that it does not address childhood poverty, income inequality, or the "dysfunctional" healthcare system in the United States.

Sanders explained that the bill "turns its back on the working parents of this country and our children."

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Sanders urged Democrats to support his effort to amend the bill so that it does more to help American working families.

Conservatives complimented Sanders on social media after Republicans on Capitol Hill have pointed out in recent days that the Congressional Budget Office acknowledged that the Inflation Reduction Act will have a negligible effect on inflation.

"Bernie Sanders, of all people, is being more honest about this garbage bill than Joe Manchin is," Heritage Foundation Communications Director John Cooper tweeted.

Bangladesh announces fuel price jump, stokes inflation fears

Bangladesh raised fuel prices by around 50% on Saturday, a move that will trim the country's subsidy burden but put more pressure on inflation that is already running above 7%.

The South Asian country's $416 billion economy has been one of the fastest-growing in the world for years.

However, soaring energy and food prices due to the Russia-Ukraine war have inflated its import bill, forcing the government to seek loans from global agencies, including the International Monetary Fund.

The price for petrol has been increased by 51.2% to 130 taka ($1.38) a litre, 95-octane gasoline by 51.7% to 135 taka and diesel and kerosene by 42.5%, the power, energy and mineral resources ministry said in a statement.

The fuel price increase was inevitable given global market conditions, the ministry added, noting state-run Bangladesh Petroleum Corporation had incurred a loss of more than 8 billion taka ($85 million) on oil sales in the six months to July.

"The new prices will not seem tolerable to everyone. But we had no other choice. People have to be patient," Nasrul Hamid, state minister for power, energy and mineral resources, told reporters on Saturday.

He said prices would be adjusted if global prices fall. "It was necessary but I never imagined such a drastic hike. I don't know whether the government is fulfilling the prerequisite to have an IMF loan," a government official said.

Fed’s Bowman Backs More Large Rate Hikes Until Inflation Eases

The Federal Reserve should keep considering large hikes similar to the 75 basis-point increase approved last month until inflation meaningfully declines, Governor Michelle Bowman said.

“My view is that similarly-sized increases should be on the table until we see inflation declining in a consistent, meaningful, and lasting way,” Bowman said Saturday in remarks prepared for an event organized by the Kansas Bankers Association.

Bowman added that she supported last month’s rate increase and backed the move away from offering specific forward guidance at the press conferences following policy meetings. 

Policymakers lifted rates by 75 basis points in July and June, part of an aggressive tightening campaign aimed at cooling inflation that’s running at the fastest pace in 40 years.

A strong jobs report released Friday adds more pressure on the Fed to make another big move in September to cool demand and bring price gains under control.

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The US economy added 528,000 jobs in July, more than double estimates, and the unemployment rate fell to 3.5%, matching a five-decade low. The size of the next rate increase will ultimately be decided by economic data, Bowman said. 

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