Blog@GraceJunction

(Re-post from March 17th, 2008)
Read carefully. I wrote ‘Great Suppression’ and not ‘Great Depression’.

1929 is etched in world history as the year that caused a great and dramatic meltdown or downturn of the world economy. The depression had devastating effects in both the industrialized countries and those which exported raw materials. International trade declined sharply, as did personal incomes, tax revenues, prices, and profits. Cities all around the world were hit hard, especially those dependent on heavy industry. Construction was virtually halted in many countries. Farming and rural areas suffered as crop prices fell by 40 to 60 percent. Facing plummeting demand with few alternate sources of jobs, areas dependent on primary sector industries such as farming, mining and logging suffered the most. Though the slump started in many countries much before 1929, it was the US downturn that really brought it down. (more…)

It has happened after 40 months. Inflation has touched the 7% mark. Minerals and staples like vegetables, rice, wheat and edible oils, all have taken a northward climb.

The reason cited is that the demand for staples and vegetables has increased and the supply has not been as forthcoming as expected. The agricultural output has reduced, due to not upto the mark monsoons in certain sectors and bad throughput in other areas. Climatic changes have also effected yields.

The demand has increased manifold!

So naturally inflationary pressures are natural outcome of such a situation. A supply shortage does fuel inflation. (more…)