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The monster called the Inflation.

April 17, 2008



  Halo everybodySmile,   




In the movie  sequel of  The Pirates Of Caribbean  " Dead man’s chest "  the last scene saw the deadly monster swallowing the ship , Black Pearl  with its Captain Jack Sparrow left fighting against it all alone.


The World Bank has announced emergency measures to tackle rising food prices around the world.World Bank head Robert Zoellick warned that 100 million people in poor countries could be pushed deeper into poverty by spiralling prices. The crisis has sparked recent food riots in several countries including Haiti and Egypt. In India , protests against the price rise is taking place in many cities.


The last 6 months , is witnessing a cataclysmic  changes in the strong and growing Asian markets , which may lead to the creation of Monster called the Inflation and even worse called the Stagflation which may  and will swallow the three biggest Asian economies China, India and Japan and later the smaller economies like Singapore , Taiwan, Korea etc.


This monster has already caused a lot of havoc in The U.S  and European Market, which are facing another great depression like situation the 1930’s.


Have your savings followed suit?

$USD Chart

Collapsing U.S. Dollar

The U.S. dollar has plummeted 22% in just last two years alone.


After all what are these monsters  Inflation and Stagflation. The continuous and increasing rise in in the prices of all the commodities  in an economy is called the Inflation. The Inflation along with continuous rise in  Unemployment  is called the Stagflation.Together these two monsters are capable of wrecking any ship in any sea.


The present ships now are India AND China. Both these economies are witnessing an unprecedented boom never witnessed in their history. Their growth rate of 11% for China  and 8% for India has been predicted. The equity and derivative market is dynamic in both these countries. The share market of India  is booming to more than 20,000 points. The domestic consumption is healthy .The foreign reserves is the highest in the world.  Their currency is getting stronger against the weakening US dollar.All indicators show that these two economies will become the major economic superpower in the near future.


Unless ofcourse , they are hit by  a storm. And the storm is already blowing. The decline in the Us economy has put brakes to the to the economies worldwide.The first effect was seen in the Mumbai stock market witnessing a decline to 14000 points in just 3 months from 20000 points. Then came the rise in gold to  Rs 13,000 /10gms ,silver   is at Rs 23000 /kg the oil price is around $112 , a barrel. The steel price is rising fast. The prices of daily items are increasing at a rapid rate all over the world leading to violent protests. The world bank has reannounced the growth rate to  9% for China from 11%. The rise in the strength of the  currency is also leading to the rise in Inflation.


In India, the Inflation rate has risen to 6-7 % from earlier 3% , few days back. Chinese inflation is growing out of control. They’ve upped their bank reserve requirements to a record. That means Chinese banks can’t lend as much money. Yet, inflation still hangs at an 11-year high at 8.7% in February.


Steep rise in Chinese food prices

Woman shops in Beijing

Higher food prices are a worry for the Chinese authorities

Food prices have risen 21% in China so far this year, fuelling concerns about inflation in the economy and the affordability of basic staple goods.

The surge was confirmed by the National Bureau of Statistics, which also revealed that economic growth eased slightly in the first quarter.

Growth dipped to 10.6% from 11.2% in the last three months of 2007, the weakest performance in over a year.

Rising food prices could cause major global instability, it has been warned.

With the global economy slowing markedly, China will struggle to match recent annual growth rates. Last year the economy grew by 11.7%.


So inflation is high and they feel it could go much higher. If this continues for long , it will lead to decline in consumption, leading to decline in the growth rate in the industry leading to retrenchment of workers , causing unemployment and leading to Stagflation.The dream of these two economies of becoming the world leader will sooner be over , unless of course the govt. and the industry wakes up to fight these monsters like captain Jack Sparrow and mind it , they have to do it all alone until their ship sinks.


                      Anurag Dubey       






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