April 25, 2008
How is macroeconomic decline affecting the personal finances of the common citizen
By admin
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It is not a secret for anyone that the United States is experiencing a general decline in the economy - despite whatever the official figures might claim. Due to the high impact of the war in Iraq, the international price of oil has reached historical limits and the costs of industrial operations has also increased, likewise.
How does it impact the finances of the common people; let’s say you and me? I don’t want to look like someone who repeats what everyone else is saying, but it is more than obvious that any decline in the production is paid by everyone. Yes, everyone.
When the price of oil increases, that increase is echoed in the costs of producing fuel, then it increases the prices of transportation, thereafter the costs of feedstock, machinery, maintenance and operations involved in the industrial production. The costs of transportation also impact the final retail price.
And, added to the increase in the price of oil, there is a pressure on the budget, due the costs of war. All of that together has to reflect in overtaxing and the side effect of reducing the investments. If we take into account the devaluation of the currency, the problem is something really worrying.
Overtaxing, inflation and on the other hand, devaluation and reduction of investment have an extreme effect on the wallet of the citizens. First, the rates of loans tend to increase, due to the market pressure and the increased risk of financial operations. And if the case is that you have a mortgage loan going on and a non-fixed rate, maybe foreclosure can knock at the door if you don’t pay enough attention and apply smart measures to reduce expenses.
As the production cycles grow up in costs, the prices also do. That is why the prices of the products in the supermarket change (up) more frequently. The result is that there is more expense than the chance of saving.
And while the currency loses position against the Euro, the real value of the money decreases proportionally. If one thinks about it, it is another kind of tax, another imposition over the budget of the common citizen.
That is why, when I see the Government spokespersons talking about how much the economy is growing and how successful the campaign in Iraq is going, I can not prevent to mentally visualize a cosmetic plastic surgery of the situation of the country.
Topics: Personal Finance Advice |
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