I’m no good at economics lol
In: 4812
I will disclaim that I am by no means an expert, but let me try:
When inflation becomes a problem in our economy, the ‘feds raise the interest rates’, which has been the case after the 2020 US election. These types of shifts typically happen in the time leading up to an election year, and are somewhat of a trend. Many Republicans blamed Biden exclusively for our inflation, but he somewhat inherited it, just like Obama did from Bush in 2008. It’s what you do once you’re tossed the hot potato that determines where the ship will go. Please do not anyone go into politics. I don’t care.
When the interest rates are raised, it slows down the economy enough to cut extra spending. Now we get into supply and demand. Loans from banks for mortgages, car loans, personal loans, business loans, etc are all raised interest rates, which means your monthly and overall total cost is higher. This disencourages spending to cut demand, which raises supply.
If I don’t have an extra $200 to spend at Costco in my huge v8 10,000lb Hummer with 5mpg and $5.00/gallon diesel, then it raises supply, because I’m not buying new jeans, pre-made meals, luxuries, etc. Now the supply has gone up, and the demand has gone down. When the demand is low and supply is high, you must lower the price of your product, which is exactly how this helps slow inflation. That way those old $20 jeans that were $25 last week aren’t $30 next month and tailspin out of control.
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How does any of this relate to Japan? When another market begins to lose trust the dollar (or yen), it’s a sign of a ripple effect of one economy to the next, meaning that issues in the US and other parts of the globe are affecting their economy, (this may or may not include their import and export, I’m not sure) which you don’t want in a global trading market, because you don’t want it to spread elsewhere or spread to a recession.
I don’t think this shook anyone, but the media keeps pressing us on a recession coming in the next year or two, and the sign of Japan also raising their interest rates is like seeing another crack form in your concrete bridge. This might open some eyes wide for the next few weeks to months.
And fucking Russia isn’t helping anything right now either with their conflict with Ukraine, which by the way was the original cause to the gas prices spiking in 2021.
Media will influence the markets, Putins health and outcome will sway a few markets. If Ukraine loses the war, it’ll stir things up. Especially with the winter upon us, who knows what disaster or victory to expect over the next 6 months, but it’ll hit the markets, that’s for sure.
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