Inflation, Hyperinflation, Deflation Explained By: Visionone Capital Management - - https://www.facebook.com/
Tax write-off for business...
Inflation, In economics, inflation refers to a general progressive increase in prices of goods and services in an economy. When the general price level rises, each unit of currency buys fewer goods and services; consequently, inflation corresponds to a reduction in the purchasing power of money.
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The opposite of inflation is deflation, a sustained decrease in the general price level of goods and services. The common measure of inflation is the inflation rate, the annualised percentage change in a general price index.
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Inflation Causes & Effects Explained By: Money Wisers Group - FACEBOOK.COM/MONEYWISERS
Two major types of inflation can lead to an increase in the level of prices. In economics, we refer to these as the demand-pull effect and the cost-push effect.
Demand-Pull Effect
Demand-pull inflation happens when an economy experiences an increased demand for consumer goods. This is inflation driven by consumers. Supply and demand. As demand goes up, prices also go up because buyers are willing to pay more.
When wages go up — like when unemployment is low and employers need to
pay more to attract and retain workers — people have more money to spend
on stuff. Their demand increases. Companies raise prices to a level
consumers are willing to pay to keep supply and demand in balance.
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Cost-Push Effect
Cost-push inflation happens when prices go up because of a higher cost of production. This is inflation driven by producers.
Cost-push inflation usually happens when wages or the cost of raw
materials goes up. Prices increase because it costs companies more to produce goods.
This is another case of keeping supply and demand in balance.
When the cost of production goes up, supply goes down at current
prices because producers can’t make as much for the same amount of money. Prices increase to ensure producers can afford to keep up with demand.
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Common causes of this kind of strong inflation include:
- Money Supply. An increase in the money supply —
that is, a government literally printing money — can provoke inflation
if it outpaces economic growth. When the
U.S. Federal Reserve (the Fed) puts money into circulation faster than the economy demands it, the value of a dollar goes down. Think of dollars in this case like collector’s items: The rarer they are, the more valuable.
National Debt. When the national debt is high in relation to how much income a country can generate (GDP) - , a government can either raise taxes or print more money to pay it off. Higher taxes mean higher costs for producers, which leads to higher prices. Printing more money increases the money supply and devalues the currency.
- Exchange Rates. In a global economy, the value of the U.S. dollar compared with international currencies affects prices in the U.S.. When the dollar is less valuable compared with a trade partner’s currency, imported goods cost more to U.S. consumers.
Each of these can happen regardless of consumers’ income. If wages don’t increase, but the money supply, national debt, or exchange rate drives prices up, U.S. consumers become less able to buy stuff, which can stall or slow economic growth.
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Effects of Inflation
Inflation affects the cost of any goods or services in an economy — including major purchases like homes and cars; consumer goods like food and televisions; personal services from construction to health care; and financial services like banking, loans, and credit cards.
Common effects of inflation include:
- Prices Rise. The most obvious effect of inflation is higher prices on everyday goods and services. That means a higher cost of living, but also generally higher wages.
- Interest Rates Go Up. To keep inflation from rising out of control, the Fed typically raises the market interest rate to increase the cost of borrowing money and keep from pumping too much money into consumers’ hands and spiking demand and prices.
- Debt Is Cheaper. If the inflation rate is greater than your interest rate on debt, you benefit by repaying the debt with less-valuable money. In countries that don’t manage interest rates as the U.S. does, debt becomes cheaper with inflation, which can accelerate inflation further.
- Saving Is Deterred. If the inflation rate is higher than the yield on a savings account or the return on investments, consumers are incentivized to spend now rather than save money that will lose purchasing power over time. Raising interest rates in the U.S. helps savings keep up with inflation to avoid this dilemma.
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Hyperinflation Explaing By:
Visionone Holding Company -
Hyperinflation...
In economics, hyperinflation is very high and typically accelerating inflation. It quickly erodes the real value of the local currency, as the prices of all goods increase.
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Hyperinflation: Its Causes and Effects Explained By: Femkonsa Capital Investment -
Causes of Hyperinflation
Hyperinflation has two main causes: an increase in the money supply and demand-pull inflation. The former happens when a country's government begins printing money to pay for its spending. As it increases the money supply, prices rise as in regular inflation.
The other cause, demand-pull inflation, occurs when a surge in demand outstrips supply, sending prices higher. This can happen due to increased consumer spending due to a growing economy, a sudden rise in exports, or more government spending.
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Effects of Hyperinflation Explained By: Fruital Investment Group - ...
When hyperinflation is in effect, consumer behavior adjusts. To keep from paying more for goods tomorrow, people begin hoarding today.
That stockpiling creates shortages. Hoarding can start with durable goods, such as automobiles and washing machines. If hyperinflation continues, people hoard perishable goods, like bread and milk.
These daily supplies become scarce, and more expensive, and the economy falls apart.
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Hyperinflation sends the value of the currency plummeting in foreign exchange markets. The nation's importers go out of business as the cost of foreign goods skyrockets. Unemployment rises as companies fold.
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There are two winners in hyperinflation. The first beneficiaries are those who took out loans and find that the collapsing value of the currency makes their debt worthless by comparison until it is virtually wiped out.
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Second, Exporters are also winners because the falling value of the local currency makes exports cheaper compared to foreign competitors. Additionally, exporters receive hard foreign currency, which increases in value as the local currency falls.
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REMEMBER, Hyperinflation in Weimar Germany
The most well-known example of hyperinflation was during the Weimar Republic in Germany in the 1920s. Through World War I, the amount of German paper marks increased by a factor of four.
By the end of 1923, it had increased by billions of times. From the outbreak of the war until November 1923, the German Reichsbank issued 92.8 quintillion paper marks. In that period, the value of the mark fell from about four to the dollar to one trillion to the dollar.34
At first, this fiscal stimulus lowered the cost of exports and increased economic growth.
When the war ended, the Allies saddled Germany with another 132 billion marks in war reparations. Production collapsed, leading to a shortage of goods, especially food.
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REMEMBER, Hyperinflation in Venezuela
The most recent example of hyperinflation is in Venezuela. Prices rose 41% in 2013, and by 2018 inflation was at 65,000%.6 In 2017, the government increased the money supply by 14%.7 It is promoting a new cryptocurrency, the "Petro," because the bolivar lost almost all its value against the U.S. dollar.
Unemployment rose to over 20%, similar to the U.S. rate during the Great Depression.
How did Venezuela find itself in such a mess? Former President Hugo Chávez had instituted price controls for food and medicine. But mandated prices were so low it forced domestic companies out of business.
In response, the government paid for imports. In 2014, oil prices plummeted, eroding revenues to the government-owned oil companies. When the government ran out of cash, it started printing more.
As of 2016, Venezuela’s foreign debt was about $100 billion.
The annual inflation rate for consumer prices was at 2,300% percent in early 2020.
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REMEMBER, Hyperinflation in Zimbabwe
Zimbabwe experienced hyperinflation between 2004 and 2009. The government printed money to pay for the war in the Congo. Also, droughts and farm confiscation restricted the supply of food and other locally produced goods.
As a result, hyperinflation was worse than in Germany. The inflation rate was 98% a day, and prices doubled every 24 hours.13
It finally ended when the country retired its currency and replaced it with a system that used multiple foreign currencies, predominantly the U.S. dollar.
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Deflation Explained By: Buyheremarket Enterprise -
Deflation... In economics, deflation is a decrease in the general price level of goods and services. Deflation occurs when the inflation rate falls below 0% (a negative inflation rate). Inflation reduces the value of currency over time, but sudden deflation increases it.
This allows more goods and services to be bought than before with the same amount of currency. Deflation is distinct from disinflation, a slow-down in the inflation rate, i.e. when inflation declines to a lower rate but is still positive.
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Deflation is the general decline of the price level of goods and services. Deflation is usually associated with a contraction in the supply of money and credit, but prices can also fall due to...
Deflation is the general decline of the price level of goods and services.
Deflation is usually associated with a contraction in the supply of money and credit, but prices can also fall due to increased productivity and technological improvements.
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Tax write-off for business..
Tax write offs are eligible expenses that you can use to deduct from your income
when filing your business taxes.
How to pay yourself as an llc single member..
Having an ein numer allows you to open a business bank account and to apply for a business loan e.i.n = employer identification number
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Distribution is to pay yourself - when you pay employees you receive deduction but not yourself.
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As
an llc the best way to pay yourself is by owner distribution. you are
simply transferring money from your business account into your personal
account.
Whether by writing a check or wire the fund directly to your account.
as the owner of a corporation, you are a shareholder, not an employee. no w2 wages.
technically, llc's are pass-through entities.
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Generally, you are responsible to pay federal income tax, state income taxes, and self-employment taxes
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Pretty much for any business; cash is the lifelive of a business.
cash is the blood and heartbeat of a business
the shorter the distance they can go. 90% of business fail because of shortage of cash.
In business it's good to have in hand at least 3 months of operating expenses for unexpected.
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As a business person, you should set money aside to reach strategic business goals.
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Business tax write-offs...
Start up organizational costs, you are entitle to $5000 for llc's tax write offs.
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Home office deduction for a designated space, or a room in your home strictly for business - home office expenses write-offs.
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Business vehicle deduction:
2 different ways to vehicle deduction... #1- by mileage, about or over 50 cents per mile you drive .
#2- By depreciating the vehicle . vehicle depreciates over the course of 5 years
or by straight line depreciation
Another way is by double declining. code section 179 allows you to deduct.
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marketing and advertisement are two of the biggest expenses in business - business expense deduction.
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Turning an llc's into an s corp, you will eliminate 15.3% self-employment tax.
An s corp requires owners to pay themselves.
You can choose to tax yourself as an llc or as an s corp.
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More ways to write-off tax in your business...
Every year over 2 million tax-payers overpay in taxes, about or over one billion dollar.
Business meal, you can write off up to 50% of your business income
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Business interest expenses write off:
when your business has debt and you're paying interest on that debt .
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Tax write off - retirement contribution for myself and for my employees for qualified plan.
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Tax write off - health saving account contribution - health saving account
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Self-employment taxes, shareholders of s corp do not pay self-employment taxes.
However, you are required to pay yourself a salary which are subject to taxes.
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Pass-through tax deduction, you can write off up to 20% of the business income.
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Individual tax write-offs
Student loan interest deduction. - Standard deduction... free - bies
Itemize deduction: - Mortgage interest deduction
The irs allows deduction up to $10000 in state tax deductions
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Medical and dental expense deduction.
On medical and dental expenses that exceed 7.5% of 100.000 dollars
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Property tax deduction
Property taxes and local taxes are called: salt = state and local taxes . irs allows to deduct up to $10.000 in combination
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Charitable contribution can be deductible
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