Logo of Phnom Penh Post newspaper Phnom Penh Post - Time to guard against global inflation risks

Time to guard against global inflation risks

Content image - Phnom Penh Post
A bank staff counts RMB and US dollar notes in a bank in Nantong, Jiangsu province on Aug 6, 2019. Photo Sipa/China Daily

Time to guard against global inflation risks

The US House of Representatives has passed a new economic bailout plan worth $1.9 trillion to financially support the families and enterprises affected by the novel coronavirus pandemic.

This is the third bailout plan the US has rolled out since the outbreak of the novel coronavirus in the country. These bailout plans are worth a total of around $5 trillion. The fund was mainly paid by the Federal Reserve in the form of national bonds. In other words, it is tantamount to the monetisation of financial deficits, injecting huge amounts of liquidity into the market, raising stock prices and prices of other kinds of financial assets in the US.

Fearing inflation, the return rate on the national debt of the US has soared quickly. It is very likely that the US economy will enter a phase of inflation.

In other words, to maintain social stability and the growth of the economy, the US is printing currency notes without thinking of the consequences. Such large scale launch of currency notes might have strong spillover effects.

At the same time, it is estimated that in the foreseeable future the US will spend $3 trillion on upgrading its infrastructure facilities, which will unavoidably push up the prices of staple commodities.

Although the US wants to shorten the income gap through these stimulus packages, they will actually further widen the income gap in the country, as asset prices grow faster than wages. It is always the poor people who bear the brunt of inflation as their spending power can be seriously eroded.

Meanwhile, raising the minimum wages and the tax rate will further weaken the growth of investment and employment, leading to the emergence and co-existence of a sluggish economy and high unemployment rates.

If the situation continues to evolve in this manner, the turmoil in the financial system, and the global inflation might directly threaten the stability of the world economy, particularly of China.

Therefore, China should take precautions to prevent the already rising inflation pressure from depressing its consumption, which has been on a difficult recovery path.



  • Volunteer scheme to foster ‘virtuous’ humanitarian spirit

    A senior education official said volunteer work contributes to solidarity and promotes a virtuous humanitarian spirit among the youth and communities. Serei Chumneas, undersecretary of state at the Ministry of Education, Youth and Sport, made the comment during the opening of a training programme called “

  • Chinese firms unveil preliminary results on metro, monorail for capital

    Minister of Public Works and Transport Sun Chanthol and representatives from China Road and Bridge Corp (CRBC) and its parent company, the state-owned China Communications Construction Co Ltd (CCCC), met on June 24 for talks on results of the firms’ preliminary study on a potential metro

  • ACLEDA, WU to enable global money transfers

    Cambodia's largest commercial bank by total assets ACLEDA Bank Plc and global money transfer firm Western Union (WU) have partnered to offer customers cross-border money transfers to 200 countries via “ACLEDA mobile” app. In Channy, president and group managing director of ACLEDA, said the June 22 agreement

  • Walmart plans to diversify stock of Cambodia goods

    Walmart Inc, the world’s biggest retailer, on June 22 reiterated recent plans to scale up and greatly diversify its purchases of Cambodian products, according to the labour ministry. This came during a virtual working meeting between Minister of Labour and Vocational Training Ith Samheng and

  • Cambodia detects new Covid cases after 52 days: PM

    After 52 days of zero new Covid-19 cases, Cambodia has now detected new infections, according to Prime Minister Hun Sen. In his special audio address to the nation late on June 28, Hun Sen said the new cases were detected on people who had undergone PCR tests

  • Cotton club growing in Battambang

    The global market for “vegan leather” – materials that act as alternatives to traditional leather that can be synthesised from cork, apple peels, cactus, recycled plastic, grape pomace and pineapple leaves, among other things, and supposedly require no chemicals or water to produce – is expected to