Final Word from Wednesday, May 12, 2021

Central banks of the world can't print trillions of new dollars, euros, crowns and other currencies without eventually causing consumer prices to rise, just as asset prices have. Overproduction of goods in low-cost countries can disguise the effect of the money-printing for a certain period, because it creates excessive supply that helps to keep prices of the goods in check. That's called supply and demand. The Chinese have been flooding the world with cheap goods, and in the process they have been cornering the market by making it uneconomical to produce in the West. Under classic monopoly theory, this leads in time to a reduction in supply as a way to squeeze the buyer. In a sense, this is already happening with computer chips. In the medium term, consumers are faced with a bleak price situation. The debasement of currencies by central banks is trickling down just as the supply of some products is unable to keep up with demand. China's moment is inching closer. [ Czech Republic CNB Czech National Bank ]

Glossary of difficult words

asset prices - (in this context) the prices at which stocks, bonds and other financial instruments are sold;

in check - under control;

to corner (a market) - to control (a market) by dominating the supply of a particular commodity;

to squeeze (a buyer) - to extract a higher price (from a buyer) by applying pressure;

bleak - not hopeful or encouraging;

debasement (of a currency) - reduction of the value by increasing the quantity;

to trickle down - to go from one level to another at a slow rate;

to inch - to move along slowly and carefully.

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