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Economics Nerd Central/ The Global Inflation Thread
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<blockquote data-quote="CaptainSensible" data-source="post: 7040672" data-attributes="member: 34104"><p>While there is pent up demand for some goods or services I think the problem is more on the supply side.</p><p></p><p>After the 2008 recession central banks also printed a truckload of money and large bouts of inflation was expected but never materialised because China stepped into the breach and basically supplied cheap goods to the world.</p><p></p><p>Fast forward to covid and the printing presses were turned on again, however the difference now is China's zero covid policy and the fact the world in the intervening years became dependant on China for cheap goods. Currently there are 50-700 ships berthed outside Shanghai waiting to load, this adds to the cost of transport enormously and every day lost adds to the cost. Also many factories have been shut down hence we are competing for an ever dwindling supply of goods, so demand doesn't necessarily have to increase for prices to increase.</p><p></p><p>I read about Hertz in Ireland whereby they sold off upwards to half of their fleet to generate income during covid but now can't replace these cars because of chip shortages, prices for rental cars are now 40% higher than 2019 because demand has increased relative to supply even though this demand is lower than pre covid levels.</p></blockquote><p></p>
[QUOTE="CaptainSensible, post: 7040672, member: 34104"] While there is pent up demand for some goods or services I think the problem is more on the supply side. After the 2008 recession central banks also printed a truckload of money and large bouts of inflation was expected but never materialised because China stepped into the breach and basically supplied cheap goods to the world. Fast forward to covid and the printing presses were turned on again, however the difference now is China's zero covid policy and the fact the world in the intervening years became dependant on China for cheap goods. Currently there are 50-700 ships berthed outside Shanghai waiting to load, this adds to the cost of transport enormously and every day lost adds to the cost. Also many factories have been shut down hence we are competing for an ever dwindling supply of goods, so demand doesn't necessarily have to increase for prices to increase. I read about Hertz in Ireland whereby they sold off upwards to half of their fleet to generate income during covid but now can't replace these cars because of chip shortages, prices for rental cars are now 40% higher than 2019 because demand has increased relative to supply even though this demand is lower than pre covid levels. [/QUOTE]
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