How inflation can change our world

Gravitas Plus: How inflation can change our world

Inflation is more than a change in your purchasing power. Inflation can give rise to dictators like Hitler. It can also force a country into irrelevance, like Venezuela. As our world battles record inflation, Palki Sharma brings you the 4 ‘P’s you need to watch out for.

let me tell you a story the year is 1933
the german economy is in a shambles the
war has left the country better the
treaty of versailles has forced berlin
to pay war reparations how much
132 billion gold marks
that some 31.4 billion u.s dollars
germany is in debt germans are
demoralized there is social unrest two
successive rounds of elections have
failed to restore stability there is
post-war hyper inflation
there’s unemployment
there’s uncertainty adolf hitler and the
nazi party decide to exploit this crisis
on the 30th of january hitler is sworn
into power he is the new leader of
germany the rest they say is history
moral of the story financial distress
and inflation have the power to change
the course of history
and throughout this week we told you
what’s happening around the world how
stocks are falling how currencies are
losing value fuel is becoming more
valuable prices of basic commodities are
going up tonight we’ll tell you what an
inflation means
not for your purchasing power or the
money in your bank but for the world we
live in
what does inflation mean for the world
order
hello and welcome to gravitas plus i’m
palki sharma padhya and this is our
world
a conglomeration of democracies
authoritarian regimes and constitutional
monarchies
will it remain this way post inflation
today our world is interconnected it’s
close
there is free flow of trade
will it remain this way after the
financial crisis
you see inflation affects politics
policies global priorities and poverty
and we’ll talk about all four starting
with the first p politics
inflation is often called the mother of
political change
i told you what happened in post-war
germany when europe is at war again this
war has contributed to inflation there
are protests the world over and
protesters can be unforgiving at polling
boats
ask former u.s president jimmy carter
when he was in office oil and food
prices had shot up unemployment had
jumped inflation brought carter down
he lost re-election to ronald reagan
today food prices in the u.s are up 10
percent fuel prices are up 8
come november president joe biden faces
midterm elections chances are inflation
may seal this election
it could well change the course of
american politics
in india leaders know the link between
inflation and elections in 2014 when the
monsoon government lost the
parliamentary polls inflation was said
to be among the big reasons
now that you understand what inflation
can do to governments consider this
currently global inflation is over seven
percent food prices have gone up at
least seven percent
about 50 countries go to polls this year
and the next
this includes brazil israel pakistan
bangladesh turkey if prices continue to
rise
these leaders may find themselves out of
office
because rising prices can topple
governments
they can also change the fate of a
country look at venezuela it has the
largest oil reserves in the world but
where is it on the global map
it’s in the throes of a political crisis
and inflation in fact
hyperinflation between 1973 and 2022
prices in venezuela have gone up 3729
3729 let that sink in
and now allow me to also tell you this
that this is not the worst number
in february 2019 inflation in venezuela
had reached
wait for it
344
509
3 lakh 44 509
by then the venezuelan currency was junk
they said using cash as toilet paper was
more prudent than buying a roll
what happened then more than six million
venezuelans left home that’s nearly 20
percent of the country’s population
and what was once the richest country in
latin america is now struggling to stay
relevant
no country wants to meet that fate no
country wants to be wiped out by
inflation so what do they do
we come to the next p policies countries
change their policies or should i say
inflation forces countries to change
policies
let’s pull out a chart these countries
have banned the export of certain food
items since the start of the ukraine war
argentina has banned the export of
soybean oil and meal algeria pasta wheat
derivatives vegetable oil and sugar
egypt vegetable oil maize wheat flour
oils lentils pasta beans indonesia palm
oil and palm kernel oil serbia
wheat corn flour oil kosovo wheat corn
flour vegetable oil india wheat
the war has increased the prices of all
these commodities over governments
worldwide the priority now is to control
prices at home to ensure food security
because hungry voters can be unforgiving
and no government wants to risk their
roth
so come inflation trade policies
invariably become
more nationalistic
protectionist
the domestic market gets priority
sometimes diplomacy takes a back seat
speaking of which inflation also tends
to force a shift in diplomacy let’s
consider europe inflation in the
eurozone has touched a record high
what’s the euro zone it’s a monetary
union of 19 eu states
all of these have euro as their primary
currency
also as their sole legal tender
currently inflation in the euro zone is
at its highest since the creation of the
euro when was that the year 1999 meaning
inflation has touched a three-decade
high
court to see this war
a survey published in june asked
europeans across 10 countries what they
thought of the war in ukraine
more than a third said they wanted it to
be over as soon as possible even if that
meant ukraine conceding land
this war has affected the day-to-day
lives of europeans more than 40 percent
of european gas comes from russia so
does 26 of their oil sanctions against
russia and bans on russian imports have
hit europeans come winter they will need
to heat their homes
and not everyone will be able to afford
a sky-high energy bill
the war has made meals expensive in
italy pastor prices are up 40 percent so
it’s not surprising that europeans are
almost equally split when it comes to
the war some say they want peace even if
it comes at the cost of concessions
others say they want justice at the
recent nato and g7 summits european
leaders pledge to support ukraine at any
cost
but not every voter is ready to bear
this cost pollsters say the survey will
affect european policy sooner rather
than later europe could have to rethink
its priorities
which brings us to the third p
priorities
inflation forces a shift
in not only national priorities but also
global priorities
climate change for example making
climate action a global priority was not
easy it took a lot of climate cops to
convince the world to go green
inflation has reversed this
let me show you some headlines coal goes
big as inflation hits energy sector
europe may shift back to coal austria
reopens coal-fired stations despite
climate goals experts warn of climate
risks
u.s makes a u-turn on green promises do
you get the story when inflation hits
energy when petrol diesel and gas become
expensive countries lean on cheaper
energy sources like coal
even if that means polluting the earth
and accelerating climate change
never thought inflation could change so
much did you
well that’s the thing
we tend to limit the definition of
inflation to a change in purchasing
power
well price rise is definitely the
fundamental meaning of inflation also
the first fallout
inflation changes more than the money in
your bank
and that’s the point we’re trying to
make
so let’s wrap with the final p poverty
1.1 billion people around the world
cannot afford essentials like food
they live below the poverty line
with the rise in prices more people are
pushed into poverty it has its own set
of social problems like malnutrition
miscarriage infant mortality crime
joblessness inflation sets off a chain
reaction one that takes years to stop
so that’s inflation 101

 

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