Inflation and Disinflation


Fiscal policy is related to inflation, which occurs when the prices of goods and services rise steadily throughout the economy. Although many factors (such as increases in the prices of imported goods) contribute to inflation, government borrowing is major factor. When the government borrows great sums of money to bolster the economy, the total amount of money circulating tends to increase. With more money chasing the same quantity of goods and services, inflation increases too.

Theoretically, the government is supposed to pay back its debt during inflationary times, thereby taking some of the excess money out of the economy and slowing inflation to moderate level. This system worked throughout 1950s and 1960s, but during the 1970s, inflation kept building. By the end of the decade, prices were increasing by almost 14 percent a year.

Inflation of this magnitude brings an unproductive mind-set. People become motivated to buy “before the prices goes up,” even if they have to borrow money to do it. With greater competition for available money, interest rates increase to a level that makes business borrowing riskier and business expansion slower. Businesses and individuals alike begin spending on short-term items instead of investing in things like new factories and children’s education, which are more valuable to the nation’s economy in the long run.

Because of the peculiar psychology that accompanies high inflation, slowing it has always been difficult. In addition, the causes of inflation are complex, and the remedies can be painful. Nevertheless, several factors conspired to bring about a period of disinflation, a moderation in the inflation rate, during the 1980s.

Whether inflation will remain under control is debatable. The country is still vulnerable to outside shock. Bad weather could jack up food prices, and political upheavals could limit the supply and boost the price of vital raw materials. Also, government efforts to stimulate the economy could rekindle inflation. When the economy slumps, the government is inclined to increase the money supply, which tends to drive prices up.

My Consultancy–Asif J. Mir – Management Consultant–transforms organizations where people have the freedom to be creative, a place that brings out the best in everybody–an open, fair place where people have a sense that what they do matters. For details please visit www.asifjmir.com, and my Lectures.

Handling Failure Factors


Herebelow are some useful techniques for handling failure factors while building your business:

1) Square peg, round hole: the most important thing to remember is, don’t try to make something fit if it doesn’t. You may have a high level of expertise in the traditional paradigm, and many of those skills will serve you well in marketing. But be aware that others won’t. When you find a skill or technique just isn’t working in the new paradigm, don’t blame marketing—discard the technique. Also, be open to learning new ideas and skills that were designed with marketing in mind.

2) Don’t re-invent the wheel: After decades, the patterns for successful behavior in marketing are fairly established. It’s human nature to want to add our own flair to everything, but make sure you learn the basics first. Some people in past decades tried some ideas but they didn’t turn to be effective as they hoped. Don’t re-invent the wheel.

3) Work the plan, not the angles: Perhaps the most important general rule for avoiding unexpected failure factors is to focus on the simple business building system and stay away from sidelines and ‘new’ angles. You came to marketing to build a business, not to get bogged down in side ventures and alternative schemes. Indeed, it’s tempting to look for alternative ‘revenue streams,’ but the time you spend chasing these things would be much better spent invested in your core business. Once you’ve made a commitment to building a marketing business, that commitment should be total. Any side activity has the potential to draw away your focus—and your growing business can suffer.

My Consultancy–Asif J. Mir – Management Consultant–transforms organizations where people have the freedom to be creative, a place that brings out the best in everybody–an open, fair place where people have a sense that what they do matters. For details please contact www.asifjmir.com, Line of Sight