每日英语听力 Day12

it is because there was so much production of goods and services and that production was even greater than the increase of->in the money supply. So even though the money supply expanded prices actually went down because more things were produced. so you can see that there are a lot of factors and->at play in terms of the causes of an inflation and how an inflation happened->inflation happens. let’s talk about the effects of an inflation now.

So when there is inflation when there is a lot of inflation especially people are not encouraged to save people are actually encouraged to spend and invest. for example let us pretend you have ten dollars and the rate of inflation is very high right now and you put your ten dollars in a bank account saving in this account->a savings account and it has a low interst rate and that 10 dollars increases a little bit

but the rate of inflation is ten percent may be and then may be next year your 10 dollars maybe grow->has grown to 10 dollars and 5 cents in that savings account but the purchasing power has gone done for those 10 dollars now instead of needing 10 dollars to buy a hamburge, it takes 11 dollars so even though you saved 10 dollars and you earned a little bit of interest the rate of inflation went up higher and you actually lost purchasing power, you see how that works, so people are not as encouraged to save because usually the rate of inflation kills their savings it makes their savings less valuable.

so instead of that people are encouraged to spend money now because prices increase in the future if there is an->/ inflation and so people want to buy things now before prices increase and people want to invest their money in something that will provide them a return that is greater than the rate of inflation so if an flation is 10 percent you want to earn at least 11 percent with your investments so that you can beat the rate of inflation so your purchasing power would not->won't go down right?

so in the opposite scenario, if there is deflation this has the opposite effect. it encouraged people to save money because their money would be actually->will actually be worth more next year than it is worth now so you put your 10 dollars in a savings acoout and maybe that grows to 10 dollars and 5 cents next year or may be it doesn’t maybe it just 10 dollars still. however, that 10 dollars buy more next year because prices have gone down and you have received an increase of your purchasing power so that was happened when there is deflation.

and in many cases deflation might result in less investment because less people don’t need to chase the best form->forms to investment to->of beat the rate of inflation because there is not inflation there is deflation. so people don’t need to search for those investments. they can just keep their money in their->a bank acoount and it grows in real value over time because prices are going down.

so you see how inflation and deflation encourage the opposite behavior right and when it comes to wiggets->wages the word wages just refers to the amount of money that you make specially the amount if money you make per hour. So when it comes to wages and your income this never keeps us from->with inflation if there is high infltion. so if there is 10 percent inflation your wages are probably not gonna go up by the same amount at the same time right.

so you might recieve rises->raises over time, your boss might raise your salary however your overall purchasing power is not incresing because prices are increasing faster than your wages so even though you might make more money in one year your real wage is actually less. when i say your real wage, I’m referring to your real wage are just->ajust for inflation right. so even though your income might increase life continues to get harder and harder to afford. the world->verb afford is used to say that you can pay for something so if i say i can’t afford that car i’m saying that i don’t have enough money to buy that car so life gets harder and harder to afford because your income doen’t increase as fast as inflation increases.

and another reason why life gets harder to afford is because interest rates after the->often rise when we have high inflation and so for example it might be a lot of->\ more expensive to get along->a loan from the bank and to pay back the money you have borrowed so things get harder to afford overall. and so of course there are many negative effects of an->/ inflation. this is something that hurts people very badly in many cases. so what are some countries that have high inflation right now in 2023.

So I’ll mention a few of them here but there are also->/ many other countries that also have many pretty high inflation currently. but here are a few of them venezuela has around 400 percent inflation that’s really really high so imagine prices today being 400 percent what they were lat year right? That’s not a good situation of couse. In the country of Lebanon recently there was over 250 precent inflation really really high. In Argentina the flation has become a big problem in reccent years and the rate of inflation has reached to over 100 percent and inflation is also a big problem->issue in Turkey right now.

it’s close to 50 percent as the time i was->of recording this. so there are some countries right now that are dealing with mayjor problems because of the->really high inflation and may be you live in one of these countries and you know exactly what i am talking about. It’s not a good situation to be in.

and how about the US, of course the US has not inflation anywhere near some of these other countries, however in june of 2022 it reached to->/ 9.1 percent which was the highest rate in recent years in the US and to be honest that 9.1 precent is understanded->understated. when i said it’s understated i am saying that in reality it’s more. so when we see the offical rate of inflation in the US we know that in reality it’s even higher than it is seen->what they are saying it is but that 9.1 percent was the highest in many years.

the rate of inflation has gone down this year however in the time when i was->of recording this we still have inflation so prices are still increasing but by less, because we don’t has defaltion yet prices are not going down yet. but they’re going up at a slower path->pace than they were a year ago for example. but the US has dealed->dealt with a lot of inflation recently and the percentage of->in the US might not seem very high to you depending on where you live but people definately feel it here.

And lastly, what do people do during periods of high inflation or hyper inflation? well one thing is that people who live in the country with really high inflation they tend to immediately exchange their money once they were->have earned it for another more stable currency or for prch->precious metals when i use the phrase precious metals i am talking about something->thimgs like gold and salve->silver right?

so for example in Turkey, right now. if people recieve their income in the local currency their might try to immediately change that for US dollar or for euros or for gold for example, so that they don’t lose purchasing power so that their money dosen’t deterate->deteriorate by tomorrow or by->\ next week, they want something more stable right? so that’s something that happens in many places.

but in the->a place like the US it doesn’t happen the same way because we have the US dollar and so the US dollar is generally considered to be the safe stable currency that other people look to for refuge when i say the word refuge, i’m talking to->about pretection and safety right so we have this currency already. so when we deal with inflation we can’t do the same thing with another currency in->\ the way other countries do this because the people in those countries might exchange their currency for dollars but we have already earned dollars.

And so most people in the US don’t really have this option, we don’t think about exchanging our currency to->for another more stable one.

right? we can exchange our dollar for precious metals of course and some people do that but we don’t actually have the option of->for exchanging our dollars for a more stable currency because we have the currency people usually view as the safe currency the safest and most stable one so that’s a little bit difference->different in the US and a lot of times in->during the->/ periods of high inflation the govenment in that country will make it illegal to exchange over a certain amount of money for dollars or euros or whatever.

and if thatis the case then people create a black market for dollars or euros or whatever, so people change it illegally because they need a more stable currency and if the govenment doesn’t let them have one then they’ll have->get it illegally so that’s another thing that happens, something else that happens is that people try to invest their money quickly in something that is gonna give them a real return they don’t want to just hold currency, they might exchange it for another currency or precious metals or invest it in someting that will g a->gain in value to a greater degree than the rate of inflation and so they might try to buy something some accid->asset so that they can beat inflation.

by the way the word asset, in this context, refers to something that you own that can produce a positive economic effect to->for you for example, owning a property or owning a stark->stock so people might try to find assets that will grow faster in value than the rate of inflation right and another thing people might do is buy things now rather than later because they know that prices will increse in the future so they buy things now and in really extreme example of hyper inflation people would immediately buy things once they get paid in their local currency.

their->they might immediately buy milk or by rice or buy something because they know that it’s better to do that right now than wait a week when the price is higher right and if they buy something real now it’ll increse value->in value very very fast right and one last thing that might happen is that people might leave their country unfortunately and look for a more stable situation so that's what might happen in times of a->\ very high inflation.

Alright i think that’s all for today hopelly->hopefully this is->topic was interesting for you hopefully it’s educational and i know it’s not the funnest topic but i think it’s interesting because a lot of us are dealing with it now. remember that you can sigh up for my new podcast if you want to hear really conversations in English with the transcript of course the link is in the episode description below this episode and you also could->can also join my normal membership if you want my specialized training and if you want my advanced podcast episodes you can become a listening time family member and if you like this episode please share it with someone->anyone else you know who’s learning English and please give it a five-star rating and write a review.

alright thank you for listening to this episode and I will talk to you in->on the next episode of listening time.