Dealing with rising inflation

There are a lot of factors that may lead to a spike in prices, such as supply restrictions, which make it more expensive to create products and provide services, and happy customers who spend their windfalls from a booming economy at a quicker clip than manufacturers can keep up with demand. Combinations of these two factors often lead to inflation.

In most situations, individuals work to keep inflation rates within a target range that encourages economic growth while limiting the extent to which a currency’s purchasing value is diminished by inflation. Part of the onus for keeping inflation in check in the United States falls on the shoulders of the Federal Open Market Body (FOMC), the Federal Reserve’s monetary policy-setting committee.

Also Read, How to save money being a homemaker

Price Controls

It’s possible to think of individual-imposed price controls as either a cap or floor on the prices of the things they apply to. With the use of price controls, wage push inflation may be controlled by the implementation of pay caps.

To combat rising inflation, Richard Nixon, then the president of the United States, instituted strict price restrictions that year (1971). Inflation reached its highest levels since World War II in 1973, and despite the price controls’ early popularity and general conviction that they were effective, they were unable to keep prices under control.

Contractionary Money Policy

Common practice now calls for more stringent monetary policy to reduce inflation. A “contractionary” policy seeks to reduce the quantity of money circulating within an economy through increasing interest rates.

The increased cost of borrowing has a chilling effect on consumer and company spending, which in turn slows economic growth.

Moreover, higher interest rates on individual securities slow economic growth by luring financial institutions and investors to acquire Treasury bonds, which provide a set rate of return that is guaranteed, rather of the riskier equity investments that benefit from lower interest rates. 

Federal Fund Rates

Since the United States has never been in default on its debt, IOR is seen as a risk-free rate; hence, any rational lender should accept it as the lowest possible interest rate.

Because not all banks have deposit accounts with the Federal Reserve, this entity is necessary. By participating in the Overnight Term Reinvestment Program (ON RRP), these financial institutions may effectively purchase federal security in the evening and resell it to the Federal Reserve (Fed) the next business day.

Raising these rates causes banks and other lenders to charge more interest on riskier loans and move more of their funds into the Federal Reserve, where they are safe from loss.

Discount Rate

A loan from the Federal Reserve will cost you the discount rate. The Federal Reserve is the entity that issues these loans. The discount window is the name of the lending facility that is utilized to make these short-term loans. All Reserve Banks use the same discount rate, which is established by mutual agreement between the boards of directors of the individual Reserve Banks and the board of governors of the Federal Reserve System.

While the discount window’s principal purpose is to ensure the stability of the financial system by satisfying banks’ demand for short-term liquidity, the discount rate is yet another interest rate that has to be increased to rein in inflation.

Open Market Operations

OMOs are a tool the Federal Reserve employs to adjust interest rates by expanding or contracting the money supply, accordingly.

When the Fed buys securities, the notorious balance sheet expands, and when the Fed sells securities, it contracts. Buying securities increase market liquidity and pushes interest rates down, whereas selling securities has the reverse effect.

Conclusion

Individuals do not have a lot of options for fighting inflation. They have the power to set a price floor, but extensive price controls, which are needed to curb inflation, have a checkered history. Inflation control in the contemporary economy is accomplished mostly by contractionary monetary policy, although achieving a “soft landing” is notoriously difficult.

Life teaches you lessons more than that of you textbooks. And I believe in a little step further, that is Traveling teaches you more about life than anything else in this world. I have loved traveling, especially when it comes to road trips, these are my favourite kinds of travel. 

A journey that lets you be you, in your comfort zone, your effort of being in your space, your timings – basically you being your own guide! And when it comes to road trips – a car is your best friend. Post marriage, my husband and I have loved exploring places, during our weekends with a road trip. Despite having our own vehicle at times, we preferred hiring one on rent in order to experience different kinds of cars and their comforts. And post our kids this exersise has been fun too. Every now and then, I do come across certain applications, some car services and related ventures. Similar one was that of https://www.carpaymentcalculator.net. 

You might be aware of certain second car, new cars re-seller apps. These platforms offer you their own algorithm, and calculation methods – if you want to search for a car that fits in your budget. Now, since I already own a car, I was curious to check this site, as I love to grasp knowledge from here and there, and everywhere. So, the curiousity led me to their cars payment calculator. When I clicked on the website to check the user interface and the ease, I was shook. The ease to find a car is impeccable. A layman like me, who would definitely run to my husband for such calculations, I was able to find results which just blew my mind. 

Let us begin from the beginning. If you are someone who loves traveling like me, or loves to go on a road trip with your self-owned cars, this is one website that will fetch the major answers. When deciding to buy a car the first thing you look into is the price. Does your budget fits in the car or type of car you want to buy. Rather what could be the possibile EMI or monthly budget you would want to set, to buy a certain car.  Correct? 

This calculator from https://www.carpaymentcalculator.net will help you get that exact number of amount that you have to invest in.  During the pandemic we have seen all, like quite literally. The effect of COVID-19 on employment, the difficulty in transportation and commutations, the increasing fuel prices and a lot of other things has been a routine setback. So, post this situation and all though accumulated, you need to be specific or have a broader area of the amount you need for buying a car. 

There are times when you prefer using a small car, rather than opting for huge one, especially for the budget constraints. Let’s take it this way, if you want to buy a 15,00,000 car, so that’s your budget. But then you come to know that you could afford a used car but one that was way out of your budget in the same amount. What would you prefer? If everything is fine with the used one, there are chances you could look into the used one.  Now, the calculator https://www.carpaymentcalculator.net works in the same way. It offers you calculation for any scenario – new or used car, trade in, no trade in, etc. 

One of the highlighting features of the website is such that it allows you to link to a specific calculation, now this is possible when the results are already filled in. There is a link that appears as your calculated results, all you need to do is press the calculation button. Anything that is quick and hassle free is a thumbs up. Therefore, this is one thing I noted is that the results appear instantly. Additionally, the effort to calculate car price that fits a monthly payment or loan payment amounts, printable amortization schedules, etc.

I have used random calculators available on the internet, but never been happy with the uniqueness and quick results. There’s often a loop hole, somewhere or the other. 

Additional features of the websites includes:

1. figuring your MPG 
2. calculating your fuel budget 
3. exploring the cost of underwater trade ins.
4. saving money with bi-weekly payments 

What intrigued me was the calculation of your fuel budget. Like what? You could get an approximate value of the out of fuel would you spend! That’s amazing. I would always do mental maths when we plan a road trip! And now I do not need to get my head into this and simply put in the details and voila! I have the fuel budget right in front of me. 

There are other calculators available on the internet, where one might be able to do similar things, however, I have never been impressed with the ease and the interface. 

I swear, next time my husband plans a random road trip to surprise me, I will surprise him with my fast calculations using the calculator! I am sure he will be surprised by the results and my quick wit!