Many of us are struggling with debt management as it is, with mortgages, finance deals, utility bills, loans, credited cards and overdrafts to contend with. Put simply, negative interest rates mean that prices of goods are increasing faster than interest gained from saving. This essentially makes money stored in savings accounts worth less over any stated period.
In economics, hyperinflation means it is an inflation that is very high or “out of control”, a condition in which prices increase rapidly as a currency loses its value. Definitions used by the media vary from a cumulative inflation rate over three years approaching 100% to “inflation exceeding 50% a month”. In informal usage the term is often applied to much lower rates. As a rule of thumb, normal inflation is reported per year, but hyperinflation is often reported for much shorter intervals, often per month.
Inflation is difficult to predict but most families can do it by just keeping an eye on how much they spend on the grocery store. When inflation is on the rise the cost of everyday goods such as bread begin to increase slightly, therefore causing consumers to spend more. Being able to predict inflation rates of coming years not only gives you a financial decision making edge, but can also protect you from bad financial decisions in the future.
It forecasts are important because they influence many areas of the economy, from wage negotiations and the interest rate, to how businesses set their prices. High inflation can mean businesses spend less on things like research and development, fewer investors are willing to consider government issued bonds, and people behave inefficiently.
You only have to look around at what is going on in your neighborhood, and local shopping centre to see that something is brewing. As Government debt levels rise and treasuries failing to interest big buyers, these are warning signs that the economy is already in its first stage of collapse. The government are just keeping rates down to mask the effects.
For those without savings who are struggling with debt the situation may seem more immediate, but effective debt management is possible without huge savings. As the price of goods rises there is increasing need to save money and there are ways and means to do this in our everyday lives. When purchasing goods, ensure that price is at the forefront of your purchasing decisions. This includes shopping around. Although the major supermarkets have their own low-cost brands, there may still be lower cost goods available at the budget supermarkets.