The Hang over of Covid Jordi Pujolá skrifar 23. október 2023 10:30 In my opinion, there is no question that the high inflation in Iceland and around the world is because of Covid. The economy is a complicated mechanism that depends on many factors and moves very slowly. Therefore, you always have to wait to see the effects, impact or consequences of some measures or restrictions. Another problem is that we have a very short memory, the media is always looking for fresh content and we tend to associate the current situation with the last event. When the governments were forced to stop the economy (lock downs, quarantine, traveling restrictions, trade restrictions...), apart from not creating any Gross Domestic Product, they had to subside the private companies, the civil servants, buying very expensive health equipment, vaccines, tests... How did they manage to pay the bill? By making money. So, then the inflation started. Now that we’ve come back to normality, we feel the effects of the Covid, but many people are ashamed and don’t want to admit it. But the damage is done and all the countries have to fight the inflation, especially small countries with a volatile currency. I published an article in Vísir on March 2021 warning about the problem of having a high inflation, so I’m not going to insist on that again. The goal of any Central Bank to stop the inflation is to cool down the economy, in other words, to make the Estate, the companies and the people spend less money. This is not a popular decision, but necessary, indeed. And the main (and powerful) economical tool to stop the inflation is to raise the interest rate. That means: Less and more expensive loans. On the other hand, increasing the price of the money impacts negatively on the Gross Domestic Product again, essential exports like fish, and private companies and people with mortgages. So, this means that Iceland is basically taking the risky option of depending almost only on the tourism. This can be an advantage, but only if it’s temporary. The interest raise must be progressive, the results have to be carefully analyzed before heading to another raise, otherwise instead of cooling down the economy we freeze it. The containment of the economy needs to be shared. There are bleeding big holes on the Icelandic economy like Reykjavík city. The capital has a huge dept and it seems that the only way out is increasing taxes. But on the other hand, despite the massive construction (killing the unique charm of Reykjavík) the housing prices are extremely high and the traffic is getting worse. To finish, I think the Central Bank shouldn’t encourage people to take loans indexed to the inflation because even though they are cheaper on the short term, the consequences on the long term are terrible because the debt always grows up. This only favors the banks. The author is a writer and economist. Viltu birta grein á Vísi? Sendu okkur póst. Senda grein Mest lesið Blóðugar afleiðingar lyga Hjörvar Sigurðsson Skoðun Hinsegin samfélagið á heimili í Hafnarfirði Valdimar Víðisson Skoðun Alvöru fjárlög fyrir venjulegt fólk Þórður Snær Júlíusson Skoðun Berklar, Krakk og Rough Sleep Guðmundur Ingi Þóroddsson Skoðun Hafa börn frjálsan vilja? Sigurður Árni Reynisson Skoðun Hvar er textinn? Sigurlín Margrét Sigurðardóttir Skoðun Áhrif Vesturlanda og vöxtur Kína Jón Sigurgeirsson Skoðun Jafnréttisstofa í 25 ár: Er þetta ekki komið? Skoðun Lygin um flóttamenn á Íslandi Jón Frímann Jónsson Skoðun Rétturinn til að verða bergnuminn Dofri Hermannsson Skoðun Skoðun Skoðun Verndum líffræðilega fjölbreytni í hafi! Laura Sólveig Lefort Scheefer,Valgerður Árnadóttir,Þorgerður María Þorbjarnardóttir skrifar Skoðun Jafnréttisstofa í 25 ár: Er þetta ekki komið? skrifar Skoðun Hvar er textinn? Sigurlín Margrét Sigurðardóttir skrifar Skoðun Berklar, Krakk og Rough Sleep Guðmundur Ingi Þóroddsson skrifar Skoðun Blóðugar afleiðingar lyga Hjörvar Sigurðsson skrifar Skoðun Hinsegin samfélagið á heimili í Hafnarfirði Valdimar Víðisson skrifar Skoðun Áhrif Vesturlanda og vöxtur Kína Jón Sigurgeirsson skrifar Skoðun Alvöru fjárlög fyrir venjulegt fólk Þórður Snær Júlíusson skrifar Skoðun Hafa börn frjálsan vilja? Sigurður Árni Reynisson skrifar Skoðun Dagur sjálfsvígsforvarna – tryggjum raunverulegt aðgengi að sálfræðimeðferð Pétur Maack Þorsteinsson skrifar Skoðun Hvers vegna halda Íslendingar með Dönum? Júlíus Valsson skrifar Skoðun Hvað varð um þinn minnsta bróður? Birna Gunnlaugsdóttir skrifar Skoðun Rétturinn til að verða bergnuminn Dofri Hermannsson skrifar Skoðun Þriðja leiðin í námsmati stuðlar að snemmtækri íhlutun Íris E. Gísladóttir skrifar Skoðun Alþjóðadagur sjálfsvígsforvarna Alma D. Möller skrifar Skoðun Hækkun skrásetningargjalds – Segjum sannleikann Eiríkur Kúld Viktorsson skrifar Skoðun Alþjóðlegur sjálfsvígsforvarnardagur – mikilvægi samtals og samkenndar Ellen Calmon skrifar Skoðun Hvaða módel ertu? Heiðdís Geirsdóttir skrifar Skoðun Tilgáta um brjálsemi þjóðarleiðtoga Gunnar Björgvinsson skrifar Skoðun Blóðbað í Súdan: Framtíðarannáll? Stefán Jón Hafstein skrifar Skoðun Sparnaðartillögur á kostnað atvinnulausra Finnbjörn A Hermannsson,Sonja Ýr Þorbergsdóttir skrifar Skoðun Atvinnustefna þarf líka að fjalla um rótgrónar atvinnugreinar Guðríður Eldey Arnardóttir skrifar Skoðun Á að hita upp allan Faxaflóann? Eiríkur Hjálmarsson skrifar Skoðun Á tímamótum: Sameinuðu þjóðirnar í 80 ár Vala Karen Viðarsdóttir,Védís Ólafsdóttir skrifar Skoðun Borgar sig að vanmeta menntun? Kolbrún Halldórsdóttir skrifar Skoðun Samfylkingin hækkar gjöld á háskólanema Guðmundur Ingi Guðbrandsson skrifar Skoðun Aðgerðaáætlun í menntamálum ekki markviss Ingólfur Ásgeir Jóhannesson,Hermína Gunnþórsdóttir skrifar Skoðun Héraðsvötnin eru hjartsláttur fjarðarins Rakel Hinriksdóttir skrifar Skoðun Lygin um flóttamenn á Íslandi Jón Frímann Jónsson skrifar Skoðun Mismunun skýrir aukningu erlendra fanga Guðmundur Ingi Þóroddsson skrifar Sjá meira
In my opinion, there is no question that the high inflation in Iceland and around the world is because of Covid. The economy is a complicated mechanism that depends on many factors and moves very slowly. Therefore, you always have to wait to see the effects, impact or consequences of some measures or restrictions. Another problem is that we have a very short memory, the media is always looking for fresh content and we tend to associate the current situation with the last event. When the governments were forced to stop the economy (lock downs, quarantine, traveling restrictions, trade restrictions...), apart from not creating any Gross Domestic Product, they had to subside the private companies, the civil servants, buying very expensive health equipment, vaccines, tests... How did they manage to pay the bill? By making money. So, then the inflation started. Now that we’ve come back to normality, we feel the effects of the Covid, but many people are ashamed and don’t want to admit it. But the damage is done and all the countries have to fight the inflation, especially small countries with a volatile currency. I published an article in Vísir on March 2021 warning about the problem of having a high inflation, so I’m not going to insist on that again. The goal of any Central Bank to stop the inflation is to cool down the economy, in other words, to make the Estate, the companies and the people spend less money. This is not a popular decision, but necessary, indeed. And the main (and powerful) economical tool to stop the inflation is to raise the interest rate. That means: Less and more expensive loans. On the other hand, increasing the price of the money impacts negatively on the Gross Domestic Product again, essential exports like fish, and private companies and people with mortgages. So, this means that Iceland is basically taking the risky option of depending almost only on the tourism. This can be an advantage, but only if it’s temporary. The interest raise must be progressive, the results have to be carefully analyzed before heading to another raise, otherwise instead of cooling down the economy we freeze it. The containment of the economy needs to be shared. There are bleeding big holes on the Icelandic economy like Reykjavík city. The capital has a huge dept and it seems that the only way out is increasing taxes. But on the other hand, despite the massive construction (killing the unique charm of Reykjavík) the housing prices are extremely high and the traffic is getting worse. To finish, I think the Central Bank shouldn’t encourage people to take loans indexed to the inflation because even though they are cheaper on the short term, the consequences on the long term are terrible because the debt always grows up. This only favors the banks. The author is a writer and economist.
Skoðun Verndum líffræðilega fjölbreytni í hafi! Laura Sólveig Lefort Scheefer,Valgerður Árnadóttir,Þorgerður María Þorbjarnardóttir skrifar
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Skoðun Aðgerðaáætlun í menntamálum ekki markviss Ingólfur Ásgeir Jóhannesson,Hermína Gunnþórsdóttir skrifar