The Hang over of Covid Jordi Pujolá skrifar 23. október 2023 10:30 In my opinion, there is no question that the high inflation in Iceland and around the world is because of Covid. The economy is a complicated mechanism that depends on many factors and moves very slowly. Therefore, you always have to wait to see the effects, impact or consequences of some measures or restrictions. Another problem is that we have a very short memory, the media is always looking for fresh content and we tend to associate the current situation with the last event. When the governments were forced to stop the economy (lock downs, quarantine, traveling restrictions, trade restrictions...), apart from not creating any Gross Domestic Product, they had to subside the private companies, the civil servants, buying very expensive health equipment, vaccines, tests... How did they manage to pay the bill? By making money. So, then the inflation started. Now that we’ve come back to normality, we feel the effects of the Covid, but many people are ashamed and don’t want to admit it. But the damage is done and all the countries have to fight the inflation, especially small countries with a volatile currency. I published an article in Vísir on March 2021 warning about the problem of having a high inflation, so I’m not going to insist on that again. The goal of any Central Bank to stop the inflation is to cool down the economy, in other words, to make the Estate, the companies and the people spend less money. This is not a popular decision, but necessary, indeed. And the main (and powerful) economical tool to stop the inflation is to raise the interest rate. That means: Less and more expensive loans. On the other hand, increasing the price of the money impacts negatively on the Gross Domestic Product again, essential exports like fish, and private companies and people with mortgages. So, this means that Iceland is basically taking the risky option of depending almost only on the tourism. This can be an advantage, but only if it’s temporary. The interest raise must be progressive, the results have to be carefully analyzed before heading to another raise, otherwise instead of cooling down the economy we freeze it. The containment of the economy needs to be shared. There are bleeding big holes on the Icelandic economy like Reykjavík city. The capital has a huge dept and it seems that the only way out is increasing taxes. But on the other hand, despite the massive construction (killing the unique charm of Reykjavík) the housing prices are extremely high and the traffic is getting worse. To finish, I think the Central Bank shouldn’t encourage people to take loans indexed to the inflation because even though they are cheaper on the short term, the consequences on the long term are terrible because the debt always grows up. This only favors the banks. The author is a writer and economist. Viltu birta grein á Vísi? Sendu okkur póst. Senda grein Mest lesið Sameining Garðabæjar og Hafnarfjarðar – kostir – ókostir - skynsemi Ó. Ingi Tómasson Skoðun Eitruð kvenmennska Ása Lind Finnbogadóttir Skoðun Á undan jarðýtu komi fornleifafræðingur… Stefán Pálsson Skoðun Búum til réttlátt lífeyriskerfi Hrafn Magnússon Skoðun Drögum úr fordómum í garð Breiðholts Alex Vor Ólafs,Jörundur Þór Hákonarson,Theodóra Líf Reykdal Skoðun Leiðin til helvítis Jón Pétur Zimsen Skoðun Hin raunverulega byggðastefna Jón Þór Kristjánsson Skoðun Hvernig getum við notað nýjar ráðleggingar um mataræði? Óla Kallý Magnúsdóttir,Jóhanna E. Torfadóttir Skoðun Samningur HSÍ við Rapyd – Opið bréf til frambjóðenda í formannskjöri Hópur stuðningsmanna Íslands í handbolta Skoðun Hinn nýi íslenski aðall Kolbrún Áslaugar Baldursdóttir Skoðun Skoðun Skoðun Þau eru fá en þörfin er stór Sif Huld Albertsdóttir skrifar Skoðun Samvinnufélög, valkostur í atvinnurekstri Elín H. Jónsdóttir,Guðrún Johnsen skrifar Skoðun Leiðin til helvítis Jón Pétur Zimsen skrifar Skoðun Eitruð kvenmennska Ása Lind Finnbogadóttir skrifar Skoðun Hinn nýi íslenski aðall Kolbrún Áslaugar Baldursdóttir skrifar Skoðun Samningur HSÍ við Rapyd – Opið bréf til frambjóðenda í formannskjöri Hópur stuðningsmanna Íslands í handbolta skrifar Skoðun Gjaldskrár munu ekki virka til að koma aftur framleiðslu af stað Sæþór Randalsson skrifar Skoðun Mannúð og samvinna á tímum sögulegra þjáninga Sólrún María Ólafsdóttir skrifar Skoðun Hvernig getum við notað nýjar ráðleggingar um mataræði? Óla Kallý Magnúsdóttir,Jóhanna E. Torfadóttir skrifar Skoðun Þegar rykið hefur sest Jörgen Ingimar Hansson skrifar Skoðun Búum til réttlátt lífeyriskerfi Hrafn Magnússon skrifar Skoðun Á undan jarðýtu komi fornleifafræðingur… Stefán Pálsson skrifar Skoðun Hin raunverulega byggðastefna Jón Þór Kristjánsson skrifar Skoðun Sameining Garðabæjar og Hafnarfjarðar – kostir – ókostir - skynsemi Ó. Ingi Tómasson skrifar Skoðun Rúmir 30 milljarðar í fangelsi Guðmundur Ingi Þóroddsson skrifar Skoðun Sérstök staða orkusveitarfélaga! Guðmundur Haukur Jakobsson skrifar Skoðun Miklar endurbætur á lánum menntasjóðs námsmanna Elín Íris Fanndal skrifar Skoðun Drögum úr fordómum í garð Breiðholts Alex Vor Ólafs,Jörundur Þór Hákonarson,Theodóra Líf Reykdal skrifar Skoðun Er almenningur rusl? Sigurður Ingi Friðleifsson skrifar Skoðun Líffræðilega ómögulegt Björn Ólafsson skrifar Skoðun Veiðigjaldið stendur undir kostnaði Heiðrún Lind Marteinsdóttir skrifar Skoðun Minn gamli góði flokkur Hólmgeir Baldursson skrifar Skoðun Hve lengi tekur sjórinn við? Björn Brynjúlfur Björnsson skrifar Skoðun Orkan okkar, börnin og barnabörnin Jóna Bjarnadóttir skrifar Skoðun Að fjárfesta í sjálfbærri verðmætasköpun Ingibjörg Ösp Stefánsdóttir skrifar Skoðun Að bregðast ungu fólki í viðkvæmri stöðu Ingibjörg Isaksen skrifar Skoðun Þekkir þú áhrifavaldana í lífi barnsins þíns? Daðey Albertsdóttir,Silja Björk Egilsdóttir,Skúli Bragi Geirdal skrifar Skoðun Hliðarveruleiki hræðsluáróðurs og „pólitískur forarpyttur“ Þórður Snær Júlíusson skrifar Skoðun Fyrir hverja er Sjúkratryggingar Íslands? Hrefna Sif Jónsdóttir skrifar Skoðun Nauðsynlegar breytingar á Menntasjóði námsmanna Ragna Sigurðardóttir skrifar Sjá meira
In my opinion, there is no question that the high inflation in Iceland and around the world is because of Covid. The economy is a complicated mechanism that depends on many factors and moves very slowly. Therefore, you always have to wait to see the effects, impact or consequences of some measures or restrictions. Another problem is that we have a very short memory, the media is always looking for fresh content and we tend to associate the current situation with the last event. When the governments were forced to stop the economy (lock downs, quarantine, traveling restrictions, trade restrictions...), apart from not creating any Gross Domestic Product, they had to subside the private companies, the civil servants, buying very expensive health equipment, vaccines, tests... How did they manage to pay the bill? By making money. So, then the inflation started. Now that we’ve come back to normality, we feel the effects of the Covid, but many people are ashamed and don’t want to admit it. But the damage is done and all the countries have to fight the inflation, especially small countries with a volatile currency. I published an article in Vísir on March 2021 warning about the problem of having a high inflation, so I’m not going to insist on that again. The goal of any Central Bank to stop the inflation is to cool down the economy, in other words, to make the Estate, the companies and the people spend less money. This is not a popular decision, but necessary, indeed. And the main (and powerful) economical tool to stop the inflation is to raise the interest rate. That means: Less and more expensive loans. On the other hand, increasing the price of the money impacts negatively on the Gross Domestic Product again, essential exports like fish, and private companies and people with mortgages. So, this means that Iceland is basically taking the risky option of depending almost only on the tourism. This can be an advantage, but only if it’s temporary. The interest raise must be progressive, the results have to be carefully analyzed before heading to another raise, otherwise instead of cooling down the economy we freeze it. The containment of the economy needs to be shared. There are bleeding big holes on the Icelandic economy like Reykjavík city. The capital has a huge dept and it seems that the only way out is increasing taxes. But on the other hand, despite the massive construction (killing the unique charm of Reykjavík) the housing prices are extremely high and the traffic is getting worse. To finish, I think the Central Bank shouldn’t encourage people to take loans indexed to the inflation because even though they are cheaper on the short term, the consequences on the long term are terrible because the debt always grows up. This only favors the banks. The author is a writer and economist.
Drögum úr fordómum í garð Breiðholts Alex Vor Ólafs,Jörundur Þór Hákonarson,Theodóra Líf Reykdal Skoðun
Hvernig getum við notað nýjar ráðleggingar um mataræði? Óla Kallý Magnúsdóttir,Jóhanna E. Torfadóttir Skoðun
Samningur HSÍ við Rapyd – Opið bréf til frambjóðenda í formannskjöri Hópur stuðningsmanna Íslands í handbolta Skoðun
Skoðun Samningur HSÍ við Rapyd – Opið bréf til frambjóðenda í formannskjöri Hópur stuðningsmanna Íslands í handbolta skrifar
Skoðun Hvernig getum við notað nýjar ráðleggingar um mataræði? Óla Kallý Magnúsdóttir,Jóhanna E. Torfadóttir skrifar
Skoðun Sameining Garðabæjar og Hafnarfjarðar – kostir – ókostir - skynsemi Ó. Ingi Tómasson skrifar
Skoðun Drögum úr fordómum í garð Breiðholts Alex Vor Ólafs,Jörundur Þór Hákonarson,Theodóra Líf Reykdal skrifar
Skoðun Þekkir þú áhrifavaldana í lífi barnsins þíns? Daðey Albertsdóttir,Silja Björk Egilsdóttir,Skúli Bragi Geirdal skrifar
Drögum úr fordómum í garð Breiðholts Alex Vor Ólafs,Jörundur Þór Hákonarson,Theodóra Líf Reykdal Skoðun
Hvernig getum við notað nýjar ráðleggingar um mataræði? Óla Kallý Magnúsdóttir,Jóhanna E. Torfadóttir Skoðun
Samningur HSÍ við Rapyd – Opið bréf til frambjóðenda í formannskjöri Hópur stuðningsmanna Íslands í handbolta Skoðun