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 Ár vondra vinnubragða í Stúdentaráði HÍ Katla Ólafsdóttir,Mathias Bragi Ölvisson Skoðun Ógnin sem við sjáum ekki – Hið falda tungumál ungu kynslóðarinnar á netinu Birgitta Þorsteinsdóttir Skoðun Mannúð og hugrekki - gegn stríðsglæpum og þjóðarmorði Ólafur Ingólfsson Skoðun Myllan sem mala átti gull Andrés Kristjánsson Skoðun Sjö mýtur um loftslagsbreytingar Kristinn Már Hilmarsson,Elva Rakel Jónsdóttir Skoðun Pírati pissar í skóinn sinn Helgi Áss Grétarsson Skoðun Rösk og reiðubúin fyrir landsbyggðina Hópur Röskvuliða Skoðun Fáum presta aftur inn í skólana Rósa Guðbjartsdóttir Skoðun Icelandic Learning is a Gendered Health Issue Logan Lee Sigurðsson Skoðun Vanhæfur Sjálfstæðisflokkur Dóra Björt Guðjónsdóttir Skoðun Skoðun Skoðun Ár vondra vinnubragða í Stúdentaráði HÍ Katla Ólafsdóttir,Mathias Bragi Ölvisson skrifar Skoðun Mannúð og hugrekki - gegn stríðsglæpum og þjóðarmorði Ólafur Ingólfsson skrifar Skoðun Framtíð menntunar – byggjum á trausti, ekki tortryggni Helga Kristín Kolbeins skrifar Skoðun Fé án hirðis Þorvaldur Lúðvík Sigurjónsson skrifar Skoðun Gæludýr geta dimmu í dagsljós breytt Kolbrún Áslaugar Baldursdóttir skrifar Skoðun Myllan sem mala átti gull Andrés Kristjánsson skrifar Skoðun Sjö mýtur um loftslagsbreytingar Kristinn Már Hilmarsson,Elva Rakel Jónsdóttir skrifar Skoðun Pírati pissar í skóinn sinn Helgi Áss Grétarsson skrifar Skoðun Ógnin sem við sjáum ekki – Hið falda tungumál ungu kynslóðarinnar á netinu Birgitta Þorsteinsdóttir skrifar Skoðun Fáum presta aftur inn í skólana Rósa Guðbjartsdóttir skrifar Skoðun Rösk og reiðubúin fyrir landsbyggðina Hópur Röskvuliða skrifar Skoðun Icelandic Learning is a Gendered Health Issue Logan Lee Sigurðsson skrifar Skoðun Goðsögnin um UFS-sjóði sem róttækar „woke"- fjárfestingar Már Wolfgang Mixa skrifar Skoðun Framtíð Öskjuhlíðar Magnea Gná Jóhannsdóttir skrifar Skoðun Vanhæfur Sjálfstæðisflokkur Dóra Björt Guðjónsdóttir skrifar Skoðun Mælt fyrir miklum kjarabótum öryrkja og aldraðra Inga Sæland skrifar Skoðun Mannréttindabrot og stríðsglæpir Rússa í Úkraínu Erlingur Erlingsson skrifar Skoðun Áskorun til Félags íslenskra hjúkrunarfræðinga og Háskóla Íslands Ríkharður Ólafsson,Styrmir Hallsson skrifar Skoðun Ákvarðanir teknar í Reykjavík – afleiðingarnar skella á okkur Hópur Framsóknarmanna í sveitarstjórnum skrifar Skoðun Snjallborgin eða Skuggaborgin Reykjavík: Gervigreindarknúið höfuðborgarsvæði Björgmundur Örn Guðmundsson skrifar Skoðun Getur Sturlunga snúið aftur? Leifur B. Dagfinnsson skrifar Skoðun Vaka stendur með Menntavísindasviði í verki Gunnar Ásgrímsson skrifar Skoðun Vorbókaleysingar Henry Alexander Henrysson skrifar Skoðun Er þetta í alvöru umdeild skoðun fámenns hóps? Snorri Másson skrifar Skoðun Liðveisla fyrir öll Atli Már Haraldsson skrifar Skoðun Réttur til endurtektarprófa: Jafnræði í námi fyrir alla stúdenta Vera Mist Magnúsdóttir,Guðlaug Eva Albertsdóttir skrifar Skoðun Að standa við stóru orðin Guðmundur Ari Sigurjónsson skrifar Skoðun Aðför að landsbyggðinni – og tilraun til að slá ryki í augu almennings Ingibjörg Isaksen skrifar Skoðun Deyr mjólkurkýrin ef eigandi hennar fær eitt viðbótar mjólkurglas? Þórður Snær Júlíusson skrifar Skoðun Kynlíf veldur einhverfu: Opið bréf til Háskóla Íslands og fjölmiðla Guðlaug Svala Kristjánsdóttir,Margrét Oddný Leópoldsdóttir 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.
Ógnin sem við sjáum ekki – Hið falda tungumál ungu kynslóðarinnar á netinu Birgitta Þorsteinsdóttir Skoðun
Skoðun Ógnin sem við sjáum ekki – Hið falda tungumál ungu kynslóðarinnar á netinu Birgitta Þorsteinsdóttir skrifar
Skoðun Áskorun til Félags íslenskra hjúkrunarfræðinga og Háskóla Íslands Ríkharður Ólafsson,Styrmir Hallsson skrifar
Skoðun Ákvarðanir teknar í Reykjavík – afleiðingarnar skella á okkur Hópur Framsóknarmanna í sveitarstjórnum skrifar
Skoðun Snjallborgin eða Skuggaborgin Reykjavík: Gervigreindarknúið höfuðborgarsvæði Björgmundur Örn Guðmundsson skrifar
Skoðun Réttur til endurtektarprófa: Jafnræði í námi fyrir alla stúdenta Vera Mist Magnúsdóttir,Guðlaug Eva Albertsdóttir skrifar
Skoðun Aðför að landsbyggðinni – og tilraun til að slá ryki í augu almennings Ingibjörg Isaksen skrifar
Skoðun Deyr mjólkurkýrin ef eigandi hennar fær eitt viðbótar mjólkurglas? Þórður Snær Júlíusson skrifar
Skoðun Kynlíf veldur einhverfu: Opið bréf til Háskóla Íslands og fjölmiðla Guðlaug Svala Kristjánsdóttir,Margrét Oddný Leópoldsdóttir skrifar
Ógnin sem við sjáum ekki – Hið falda tungumál ungu kynslóðarinnar á netinu Birgitta Þorsteinsdóttir Skoðun