By Josh Resnek
Inflation is running away at the moment – and the moment is believed to be expanding every day.
Everett residents, residents in every city and town across the land are fighting rising prices and declining buying power – all of which leads to empty pockets.
Prices for gasoline, home heating fuel, food, clothing, flowers, seeds, fertilizer (most which comes from the Ukraine) and for alcohol, pot, restaurants, airfares, vacations and everything that makes life worth living are soaring.
Automobiles and trucks sell at a premium. Used cars are now as expensive as brand new cars used to be.
Drugs we buy, services that we need, every form of human interaction is now governed by rising inflation.
This includes the value of our homes and properties, and our investments.
Although the value of the US dollar remains high, it is worth right now about 7% less to all of us than it was at this time last year.
Buying power is declining as prices rise and disposable cash begins to disappear as a result.
The local real estate market remains at an all-time high.
However, the Federal Reserve Board just raised interest rates and is expected to do another raise imminently in an effort to control inflation.
This has a major effect on the real estate market.
Rising interest rates make it more ex- pensive to buy properties.
At the same time, it makes it more difficult for those of you who own your homes to sell them at the highest price.
What happens next?
Prices inevitably must retreat from the all time high to meet the demands of potential buyers who can’t afford any longer to pay the highest prices because it costs more to own the homes.
That’s what rising interest rates tend to do to the real estate market.
In plainer terms, what goes up must come down.
Buy low. Sell high.
The stock market will be impacted by higher interest rates as many investors tend to morph out of stocks and buy bonds of interest bearing securities.
Interest is always preferred to risk by investors who are savvy.
The president has announced he will be ordering the release of 180 million barrels of oil to bring down the price of international oil, which will in turn cause the price for refined gasoline to fall.
At least that is the general economic assumption.
However, this is an artificial band-aid for a pricing situation governed more by speculation than by a shortage of fuel.
A report issued Monday indicates that jet fuel in the Northeast is hovering in the $6.40 per gallon range – and outrageous price compared with what it was last year (about $2.50 per gallon).
As a result, air fares have jumped and will continue rising because fewer people will be able to fly unless the price for fuel drops.
In other words, demand will be less and because of that prices will rise.
Inflation is a mess.
The economy remains strong.
But storm clouds are rising overhead. Inflation must be controlled.
Otherwise, chaos will ensue.