Friday, May 27, 2011

When Interest Rates Rise, the Middle Income gets most affected !!!

Without the slightest of doubt we are going in for higher and higher costs of living.

The BLR has increased to something like 6.6%.  What this means is that interest rates will and has already risen.

If you check your housing loan statement, you will find that you are now paying more in terms of instalments on the interest rate.  This directly affects you because you will now have less money on the same salary for otheer things in your life. Your cost of living goes up, your standard of living goes down.

Despite whatever statements the "clever professionals" in the various institutions are saying, we are already experiencing inflationary tendencies. You do not have to be an economist from Harvard to know the price increases in almost all the daily essentials when you just visit your local market.

Ironically, quite a number of employers are complaining that salaries these days are much higher than just say four years ago. This will increase the costs of production and hence, the prices of goods and services will increase further compunding the inflationary tendency. Sounds like an unpleasant chain reaction is starting again right? Well, as long as a small ecoomy like us is still stuck in the current economic system, will continue to suffer the consequences of the system caused by its natural processes.

It also does not help that solutions are put forth by people trained by masters of the system in a faraway place.  The "solutions" are actually future traps for further, bigger problems because the root cause has never been and will never be addressed in the current system which is set to stay for many more decades unless something "out of the ordinary" happens.
 
Now there is talk of having to cut the subsidies and that if that is not done, then the country will suffer in the future. If indeed subsidies are cut, what this means is that prices will increase further.

When prices increase, your every one ringgit can now buy less things. Unless you income increases, you will be able to afford less things than before.

What is not helping is that while prices and costs are going up on one hand, on the other hand, some enforcement authorities are hurting genuine businesses on the "flimsiest of reasons" using discretionary powers given by law. It is a case of the left hand not complementing the right hand.

There seems to be no wholesome coordination of "economic recovery" efforts in this country.  For every one step forward we take, we seem to take pleasure in taking three steps back !

There also seems to be no effort at looking at wastages and leakages. At the same time, the "clever institutions" do not seem to be monitoring the "money economy" where while no goods and services are produced, they create purchasing power or in economic terms, demand. Hence, you end up having or creating a situation where demand is exceeding supply of real goods and services - once again leading to price increases.

It also does not help that the 'mainstream' is so caught up with the non bread and butter issues.

What is so difficult about being in control in a wholesome manner?

In short, brace yourselves for hard, difficult times.

Peace !

1 comment:

jon pour do care said...

Salam Bro.,

Actually, there are some serious issues being seriously thought over to help to imporve the economy. There are:-
1. Who was the actor in the video ?
2. Where is the omega watch ?
3. What food is halal ? (halal only, not hygiene)
4. What dance is haram ?

There are more but I'm letting others to add !