After more than a decade of government money printing, inflation has finally started to rear its ugly head in the budgets of consumers around the country. It feels like just about everything has doubled in price over the past few months, and that is having a tremendous impact on the spending power of families everywhere.
In addition to impacting American families, inflation and the potential for hyperinflation also impact debt collection efforts across the board. If you are attempting to collect outstanding debt from customers, this is a concern that should definitely be on your radar.
Consumers Have Less Purchasing Power
The price of just about everything is already rising faster than most consumer income levels, and we may be at just the tip of the iceberg in that respect. Should this trend continue, we will likely see consumers taking on more and more debt just to stay afloat and manage their day-to-day lifestyles.
By taking on more debt for the same lifestyle expenses, those consumers are naturally going to be less likely to splurge on luxury items. In fact, we could see the entire country forced to choose between leaning more conservative with their purchases or going broke trying to avoid accepting that fate.
Companies Need to Collect Faster Than Ever
With the purchasing power of the average consumer dropping as fast as it has been, anyone attempting to collect a current debt should be putting significant effort into conducting those collections as quickly and efficiently as possible.
Not only are consumers likely to be taking on more debt, but they are also going to have less disposable income for settling their existing debts.
Hyper Inflation Could Trigger a Massive Recession
Should this inflationary trend continue, it is highly possible that the combination of rising costs and a lack of disposable income forces the entire world into a global recession that could potentially dwarf what we saw in 2001 and 2008.
Some of the most concerned inflation experts caution that the Great Depression could be the best comparison for what could happen if things don’t dramatically improve in the coming months.
The Best Solution for 2022 and Beyond
The primary tool that the government uses to fight inflation is raising interest rates. If they can accomplish that without having too much of an impact on the stock market, they might be able to prevent any disaster scenarios from happening.
On the other hand, if they misjudge the economy and do too much or too little, they could also worsen the entire situation.
No matter where you fall on the political spectrum, inflation is an issue that should be a concern for everyone. Let’s hope that our elected leaders are up to the task.
